RBA & NFP figures AUDUSD outlook


In their latest monetary policy statement the Reserve Bank of Australia has issued a confident outlook about the economy in Australia, however  the statement was a cautiously optimistic one. According to the statement the RBA sees the Australian economy growing by 2.5% to 3.5% in 2016 fiscal year and headline inflation of between 2% and 3%.

In addition, the Australian central bank warned that uncertainty with key trading partner China is still a significant risk for the local economy.

The statement covered the following:

“A further increase in growth in household incomes and demand is anticipated, supported by rising employment, low interest rates and lower gasoline prices. The outlook for China’s growth is a significant uncertainty for the outlook for the Australian economy.”

China fears dominate the market

Although the RBA statement was rather positive and confident, the central bank is still cautious about China’s economic slowdown.

“Any sharp slowing in economic activity or increase in financial stresses in China could spill over to other economies in the region.”

Breaking away from China

Although the RBA demonstrated their Chinese slowdown fear, the central bank and the Australian government is working on “Australia’s breakaway plan” from China. Historically, Australia has been rather depended on China as the country has been a major mineral and raw material supplier for Chinese producers. However, the RBS and the Australian government are pushing for a transition in the economy, a breakaway from the traditional mining investment to other industries in the economy.

Economic transition is also supported by low rates and weaker Australian dollar. But, so far the only transition is seen in Construction industry as house prices are rising in the country.

AUDUSD technical outlook

Despite the positive outlook from the RBA, AUD  pairs were rather flat in Forex market. For AUDUSD, currently we can see that the pair has found its resistance level right on 110% Custom Fibonacci Retracement level. Additionally ahead of the NFP figures AUDUSD pair is possibly looking for a short term correction for the day, which is highly depended on the upcoming NFP Figures announcement.

From swing analysis point of view, we could expect the pair to fall towards the 50 day SMA at 0.7140 level  before it starts moving on the bullish side towards 0.7320 zone coinciding with the 200 day SMA. This view is also supported by the technical indications on 1 hour time frame. From 1 hour time frame point of view, we could expect the pair to be on the bearish run below the 0.7160 zone with targets towards 0.7140 and 0.7110 level, before we could see bullish developments.

Note: You can also download the complete RBA statement here.

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