Global macro overview for 05/09/2018

The Australian Reserve Bank (RBA), in line with expectations, maintained the cash rate at 1.50%, but this did not hinder the positive reaction of AUD. The most important element of the meeting was the message, where there were few changes compared to the previous month. If they have already taken place, they were positive with regard to the low unemployment rate, slight acceleration of wage growth and emphasizing solid economic growth. The bank also pointed out that in the last month the Aussie weakened against the dollar, which can be assessed as a positive phenomenon, although the historically translated into inflation on this account is not significant. What was lacking, and what part of the market was counting on, was a reference to last week's decision of one of the leading commercial banks to increase mortgage rates. Higher market rates mean less pressure on the central bank to tighten monetary policy, but also talk a bit about the risks that the banking sector is afraid of (rising household debt vs. falling real estate prices). For now, however, the RBA prefers to see the glass half full and focus on the positive aspects of the economy, but that does not mean that it will not see any problems in the future. Although today's AUD / USD jump was caused by the closing of short speculative positions by disappointed investors, medium-term prospects remain weak. Real estate market problems and still low wage pressure (and inflation) will bind the central bank hands. In addition, the political environment is unfavorable after the former prime minister Turnbull has filed a mandate, which led the ruling party to lose the majority in the parliament. It remains pessimistic to AUD.

Let's now take a look at the AUD/USD technical picture at the H4 time frame. The blue trend line has capped the bullish run at the level of 0.7215 and currently, the price backed towards the technical support at the level of 0.7200. The market conditions are now oversold, but the momentum remains neutral. The next technical support is seen at the level of 0.7165 and the trend is still down.


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