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The AUD/USD and AUD/NZD exchange rates will be in the spotlight this week as Dr. Philip Lowe delivers his final interest rate decision. The two pair’s were in a tight range, with the AUD/NZD trading at 1.0877 and the AUD/USD at 0.6462.
RBA interest rate decision
The Australian dollar remained in a wait-and-see mode as investors waited for the RBA interest rate decision. Most analysts expect the bank to leave interest rates unchanged at 4.1%. It has raised rates 12 times in a bid to fight the stubbornly high inflation.
The most recent economic numbers paint a picture of an economy that is struggling. The cost of living crisis has continued, with rents soaring at the fastest pace since the Global Financial Crisis (GFC).
Watch here: https://www.youtube.com/embed/MsY5F2yCkcI?feature=oembedHouse prices have also risen, with home values rising to 4.9% since February. They have risen in the past six months straight. Other numbers like the manufacturing and services sector have worsened.
At the same time, China, Australia’s biggest trading partner is struggling. Recent data showed that the manufacturing and industrial output, retail sales, and exports have retreated.
Therefore, there is a likelihood that the RBA will leave rates unchanged at 4.1%. Besides, the most recent economic numbers showed that the country’s inflation is falling. Prices dropped to 4.9% in July, down from 5.4% in the previous month.
Other reports published on Monday revealed that company gross operating profits dropped by 13.1% in Q2. Business inventories fell by 1.9% after rising by 1.2% in the previous quarter.
AUD/USD technical analysis
The daily chart shows that the AUD to USD exchange rate formed a double-top pattern at 0.6897. The neckline of this pattern is at 0.6594, the lowest level on June 29th.
Further, the pair has formed a bearish flag pattern, which is a sign that it could have a breakdown soon. It has dropped below the 25-day and 50-day exponential moving averages.
Therefore, the outlook for the AUD/USD pair is bearish, with the next key level to watch will be at 0.6362. The stop-loss of this trade will be the upper side of the flag pattern at 0.6525.
AUD/NZD forecast
The AUD/NZD pair also formed a double-top pattern at 1.1052 in February and June this year. On the daily chart, it has formed a symmetrical triangle pattern, which is shown in black. The pair is slightly above the 25-day and 50-day moving averages.
The AUD to NZD’s triangle pattern is nearing the confluence level. Therefore, the outlook for the pair is neutral, with the key support and resistance level to watch being at 1.0700 and 1.0925.
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