The Australian dollar is lower in the Thursday session. Currently, AUD/USD is trading at 0.7591, down 0.35% on the day. It has been an uneventful week for the Aussie, which has hovered close to the 0.76 level. Earlier in the week, the pair dropped to 0.7563, its lowest level since December 28.
Business confidence up, retail sales next
The RBA decision on Tuesday has overshadowed this week’s Australian releases, which have been positive. Manufacturing and construction both accelerated in January, as the AIG Manufacturing and Construction indices moved higher in expansionary territory. Commodity Prices and Building Approvals both registered double-digit gains. Perhaps most impressive was NAB Quarterly Business Confidence, which soared to 14 in the fourth quarter of 2020, after reeling off five consecutive declines. The survey found that business conditions and confidence were higher, signs that the business sector is strengthening. The fly in the ointment could be retail sales, with the December release expected to show a sharp decline of 4.2%.
This week’s highlight was the RBA policy decision, with the bank announcing that it would extend QE for another six months, in the amount of AUD 100 billion. The RBA took a page out of the Federal Reserve’s book, putting to bed the notion that the bank will taper QE anytime soon. The rate statement acknowledged the improvement in the labor market, but also noted that inflation remains below the target of 2-3%. The bank also stated that it did not expect to raise rates prior to 2024. This dovish message may serve to keep the Australian dollar from moving higher, which the RBA would be happy to see, after the sharp gains by the Aussie late in 2020.
- 0.7740 is the first line of resistance, following by resistance at 0.7838
- There is support at 0.7568, which will come under pressure if AUD/USD continues to lose ground. Below, we have support at 0.7498
- AUD/USD is testing the 50-day moving average (MA). A daily close below this line is a bearish technical signal
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