Global macro overview for 15/08/2017

Global macro overview for 15/08/2017:

The Reserve Bank of Australia Monetary released the policy meeting minutes overnight, warning about the overheating house market in Australia. Housing market conditions "warrant careful monitoring" were the exact words used by the policymakers in the statement. Despite the fact that the house prices are slowly stabilizing in Australia's biggest cities like Sydney, Melbourne, and Canberra, the prices are still rising apparently. Moreover, the statement said: "The established housing markets in Sydney and Melbourne had remained the strongest in the country, although conditions had eased since late 2016. Housing prices in Perth had declined a little further, while apartment price growth in Brisbane had been weak".

It is worth to mention, that the RBA decided to keep the interest rate unchanged at the level of 1.5% at the last meeting, where it remained since August 2016. Nevertheless, in contrast to other central banks, the Reserve Bank of Australia hasn't given explicit forward guidance regarding the future of the monetary policy. Unlike some other central banks, the RBA openly admits that it does not know what it will do with its policy rate in six, twelve or twenty-four months' time. The question remains whether the hot house market will trigger any change regarding the future interest rate levels. Most global investors are anticipating such a move at the beginning of 2018. In that case, the Australian dollar will continue to appreciate against other currencies across the board.

Let's now take a look at the AUD/USD technical picture on the H4 time frame. The market is slowly moving downward and the price is currently testing the technical support at the level of 0.7838. Any breakout lower will open the road towards the next technical support at the level of 0.7777. Nevertheless, the slight bullish divergence between the price and the momentum oscillator indicates a possible bounce to the technical resistance at the level of 0.7920 before the move down will resume.