Global macro overview for 20/06/2017:
The minutes of the June policy meeting held by the Reserve Bank of Australia shed a little light on new details as the RBA remains upbeat on the global economy and states that forward-looking labour indicators are positive but low wage growth stil curbs consumer activity. "Weak growth in retail sales in the March quarter pointed to a slowdown in consumption growth following strong growth in the December quarter," we can read in the official transcript of the policy meeting. Regarding the housing market, RBA was cautious as well in any statements. Nevertheless, it acknowledged obvious risks due to rising housing credit. Although the government has taken steps to dull the housing boom, considerable risks remain, especially in capital cities (house prices rose 2.2% in the first quarter of 2017).
Last week, the RBA maintained the official cash rate at 1.5% for ten months in a row. A rate hike to maintain the current house prices growth is not currently considered as policymakers seek faster economic growth and inflation. On the other hand, the Gross Domestic Product rose 1.7% on a yearly basis, so this might be an excuse for a rate hike, but it still remains below the RBA target of 2.75%. In conclusion, the RBA is unlikely to raise the interest rate as along as significant house price inflation persists or GDP is below 2.75%.
Let's now take a look at the AUD/USD technical picture on the H4 time frame. The pair is still trading inside of a tight range between the levels of 0.7568 - 0.7635 in overbought market conditions and visible bearish divergence growing. In a case of a downside breakout, the next support is seen at the level of 0.7516.
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