Global macro overview for 04/08/2017

Global macro overview for 04/08/2017:

The Reserve Bank of Australia has published its Monetary Policy Statement overnight and government agency released Retail Sales data. According to the Australian Bureau of Statistics, the sales were release at the level of 0.3% which was better than expected 0.2%, but worse than the last month number of 0.6%. However, it was a third straight month of increase, which is a sign that consumer spending was making a strong comeback. Overall sales were up 1.5% quarter-on-quarter, official data showed.

The Reserve Bank of Australia (RBA) said in its Monetary Policy Statement that GDP growth in the June quarter was "generally a bit stronger than in the previous quarter", and growth in the economy is likely to be around 3% in the first half of 2018. Nevertheless, in contrast to other central banks, the Reserve Bank of Australia hasn't given explicit forward guidance regarding the future of monetary policy. Unlike some other central banks, the RBA openly admits that it does not know what it will do with its policy rate in six, twelve or twenty-four months' time. The reason behind such a behavior might be apparently quite simple. In Australia, the economic shocks largely come from abroad and can often be driven by very volatile commodity prices. This is why publishing any longer-term policy path might be very misleading for the global investors and might cause an extreme and unnecessary volatility on the markets.

This RBA statement continued with a 'neutral' tone, with no hints that the RBA could hike rates anytime soon, but the most of the global investors are anticipating such a move at the beginning of 2018. In that case, the Australian Dollar will continue to appreciate against the other currencies across the board.

Let's now take a look at the AUD/USD technical picture at the H4 timeframe. The recent top at the level of 0.8064 hasn't been tested yet, but the market is still trying to move higher. The market conditions are oversold on this timeframe, so any violation of the navy trend line will directly expose the recent high for a test and a possible breakout.

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