The main event of the Asian session was the decision of the Reserve Bank of Australia on monetary policy. There were no major surprises. As expected, the RBA left interest rates unchanged at the level of 1.50%. Their low level still supports the economy and global investors can see an improvement in unemployment, a gradual increase of inflationary pressures. The real estate market has slowed down in Sydney and Melbourne.
The Australian dollar should remain within the range of the last few years. Economic growth forecasts have been slightly raised, the central bank expects GDP to reach 3.5% this year and next, the slowdown is expected to take place only in 2020. Inflation in 2019 should reach 2.25% and slightly more in 2020. The RBA rhetoric remains unchanged. As long as inflation does not increase, we should not expect any surprises from the central bank.
Business conditions remain favorable. Investments in public infrastructure support the economy. The risk factor is still the amount of consumer spending in households. The forecast for the labor market is positive, wage growth is slow, but should accelerate. By 2020, the unemployment rate is expected to fall to 4.75%.
Let's now take a look at the AUD/USD technical picture at the H4 time frame. As you can see in the graph, the AUDUSD reaction is negligible. No wonder, the market participants did not learn anything new at the end, so the price did not react very violate. The bounce from the level of 0.7204 has reached the technical resistance at the level of 0.7222 and now the bulls are trying to break through it. In the case of a successful breakout, the next target for bulls is seen at the level of 0.7229 and then at 0.7258. The positive and strong momentum supports the bullish bias, but the stochastic is getting close to the overbought levels.
