AUD/USD ends weeks unchanged, remains in range near 4-month lows
- Spot continues to consolidate near the lowest since mid-July.
- Recovery remains limited by 0.7700.
- RBA decision and statement almost a non-event.
The AUD/USD pair is about to end the week trading near the 0.7650, the same level it had a week ago. It continues to consolidate near monthly lows.
The aussie is posting marginal weekly gain versus the US dollar. It could be seen as a positive signal taking into account that it has fallen in seven out of the previous eight weeks. In October AUD/USD bottomed at 0.7622 the lowest since July. Since then it has been moving in a range around 0.7650.
The upside continues to be limited by the 0.7700 handle while to the downside, the pair keeps finding support on top of 0.7620. AUD/USD remains undecided whether to extend the decline or clear the way for a bullish correction.
Not even the Reserve Bank of Australia decision created volatility. On Tuesday, the RBA left its key rate unchanged at 1.50% as expected. It also kept its growth and inflation targets pretty much unchanged. It sounded upbeat about the outlook for investment. The Central bank warned about household consumption. It mentioned that it expects inflation to remain low. Analysts considered that the message was a signal toward steady rates for a while.
“Our currency strategists think the negative influences of monetary policy dynamics on the Aussie dollar will be outweighed by the positive influences from the strengthening in commodity prices and, on that basis, they anticipate a modestly stronger Australian dollar over time. This makes the vexing challenges for the RBA even harder, as any foreign exchange pass-through effect would put downward pressure on already-low inflation”, said analysts at Wells Fargo, looking into the medium-term outlook.
Next week events
In Australia, next week key data will be the jobs reports on Thursday. In the US, the most relevant data will be released on Wednesday with CPI and retail sales. Also, attention would be on several speeches from FOMC officials and speculations about the outcome of the tax reform.