RBA Cites optimism
The Australian Dollar has benefited in recent weeks from the broad pick-up in risk sentiment that saw the share and commodity markets are rallying. “The acceleration and torque-measures around the globe, has an investor focus on the recovery, which begins now, and the risk that assets will be reinforced, to support high-yielding currencies such as the AUD.
The Australian Dollar was more support this week by the RBA. At its June meeting, the bank held the policy at levels unchanged and cited a more optimistic Outlook. Australia is one of the most powerful States in terms of the control of the COVID-19 of the outbreak, to see only 102 deaths, U.S.-108k-in-the-US-and-39k-in-the-UK.
Governor Lowe stated that, while the economy was still facing a recession, there are signs that the “expected the depth of the downturn, less than in the past.” In the statement alongside the rate decision, Lowe said, The rate of new infections has declined significantly, and some of the restrictions were relaxed earlier than previously thought likely.
“And there are signs that the working hours stabilised at the beginning of may, after the earlier, very strong on the decline. It also has a pick-up in some forms of consumer spending.”
However, Lowe has to acknowledge that there is still a large uncertainty in the outlook, and noted that the pandemic would have long impact on the economy will take. A record 1.6 million people have claims, the unemployment rate in Australia, as a result of the virus, in the case of the wage-growth with crumbled for the rest of the employees.
In Q1 GDP is Not as Bad As Expected
After the meeting, the release of Q1 GDP in the middle of the week confirms that Australia is now in recessionary territory, at the time of registration its first contractionary reading since Q1 2011. However, with the growth falling less than expected, expected at -0.3% for the quarter vs -0.4%, the AUD remained support. The key test for the economy in the Q2 session, however, given that the new quarter captures more of the time is influenced by the lock feature. Two consecutive quarters of negative growth are required in order to confirm a technical recession, though, many business analysts and economists note that the Australian economy is already in a recession, the end of 29 years with the growth in the country.
Technical Point Of View
AUDUSD (Bearish below .6989)
From a technical point of view. AUDUSD is now testing the long-term downward trend-line from 2013 heights holding as resistance for now. The move, which was limited by the retest of the year-pivot at .6989, and with the bearish divergence on momentum studies, there is room for a retest of the year, S1 is at .6680 in the near future, unless the price breaks above the annual pivot on a closing basis.
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