Global macro overview for 06/05/2016:
In its recent Monetary Policy Statement, the Reserve Bank of Australia revised sharply downwards its inflation forecasts after slashing interest rates just days earlier due to weak first-quarter inflation data. The data was revised from expectations that the underlying inflation will remain within the target range to 1-2% underlying CPI inflation for 2016, and 1.5-2.5% inflation for the rest of the forecast period. The new forecast is much lower than the previous projection, but the GDP forecasts are still in the range of 2.5 - 3.5% in the longer term. In conclusion, Australian dollar's sharp depreciation over the last few years is expected to continue to put upward pressure on prices.
Let's now take a look at the AUD/USD technical picture in the daily time frame. The market is trading at the technical support at the level of 0.7383 and any daily candle close below it might be a strong bearish signal. Moreover, the brown trend line was broken. This fact supports the view, that bears are currently in control over this market.
