Australian twenty dollar note and one dollar coin. Image source: jeayesy © 123RF.com
Early on Tuesday morning the Reserve Bank of Australia released its monetary policy statement, in which key economists and the chairman of the RBA Philip Lowe outlined the details concerning their decision from the second of April to keep the interest rate unchanged at 1.5 per cent.
In the statement, it was noted that even though global trade tensions are slowly easing down, "continued strength in labour market data and moderating GDP growth were sending different signals about the momentum in economic activity".
As a result of that global uncertainty, the RBA was inclined to keep the interest rates unchanged for the time being, in order to avoid unknowingly hindering the economy by making premature decisions, in this environment of this global instability.
The AUDUSD currency pair lost 0.35% of its value in the first hour after the release of the monetary policy minutes, as investors reacted to the remarks by Mr Lowe and his colleagues about the moderation of economic growth but then the aussie found strength at the support level of 0.71437 and bounced back.
From RBA’s extended statement it became evident that a key factor for the sustained economic growth in the near future would be the strength of the national labour market, which is why yesterday’s unemployment data was so highly anticipated.
Even though the overall unemployment rate remained at the previous level of 5.0% and there were no major disparities between the actual data and the initial forecast, which could have potentially shocked the market, there was some initial and sizable volatility.
A prime cause for that initial bullish spike in the AUDUSD was the better-than-expected employment rate, which was not significant enough to decrease the overall level of unemployment, but still managed to beat the initial estimations of 15.2K new jobs by adding a total of 25.7K new positions in the labour force.
As a result, the AUD/USD appreciated with 27 pips on the positive employment data but then rebounded from the significantly important resistance level at 0.71854. Now that the market has time to assimilate the fundamental data from this week, the questions arise as to whether the aussie will manage to resist the bearish pressure and remain trading within the newly formulated price range between the two aforementioned levels of support and resistance.
Image source: Trendsharks ©, created with TradingView.com
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