In yet another report of a previous interest rate decision that is going to be released on Tuesday, the market is preparing to observe how RBA's policy stance has changed since the last Minutes report in early April.
On the 7th of May the Reserve Bank of Australia announced that it would not be raising the key interest rates (you can read a more detailed analysis on the decision here), and as a result the Australian Dollar extended its losing streak to eventually tumbling down to 0.68650 from a level around 0.7000, prior to the announcement of the decision. Conversely, Tuesday’s report is going to present a detailed forecast about RBA’ expectations of the near-term growth in Australia, which could either help or respectively further hamper the already struggling currency.
In the last Minutes report from the second of April, the RBA stated that:
“While the labour market had continued to improve in early 2019, GDP growth had slowed over 2018. […] The central scenario was for further gradual progress to be made on both unemployment and inflation. Members observed that a pick-up in growth in household disposable income was an important element of these forecasts” [source]
Overall, there has not been any noticeable change for the better in the underlying state of affairs with the Australian economy, despite the observed sustainable growth in disposable personal income.
Image source: TradingEconomics.com
Growth in Disposable Personal Income in Australia
Investors already weigh in on potential further short-selling of the Australian Dollar because of the apparent current impairment of the RBA. The AUDUSD is currently trading in a bearish channel, and the price has already broken below the significant support level of 0.69800, and if the pair continues to depreciate it could potentially test the 0.67250 level, that was reached during the flash-crash of the second of January.
Image source: Trendsharks ©, created with TradingView.com
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