2023-06-07 • Updated
Let's take a closer look at Australia's recent economic performance. Brace yourselves for some interesting developments. The country's economy experienced its slowest growth since late 2021 in the first quarter, raising doubts about the Reserve Bank of Australia's rapid interest rate increases. Despite the bank's record-breaking 12 rate hikes in the last 13 months, the resource-rich economy only grew by a modest 0.2% in the quarter, falling short of economists' expectations. This slowdown challenges the government and central bank as they aim to avoid a recession. The RBA's decision to raise interest rates further reflects concerns about a deteriorating inflation outlook. RBA Governor Philip Lowe has repeatedly warned about stagnating productivity and increasing wage pressures, which could keep inflation higher than desired. Recent wage increases for low-paid and public-sector employees have fueled fears of broader wage gains. Despite solid private and government investment, consumer spending slowed in the quarter, with household spending contributing minimally to GDP growth. The data also revealed a household saving-to-income ratio decline, primarily driven by rising mortgage repayments and rents. On a positive note, wage indicators showed strength, with the compensation of employees increasing. A tight labor market and historically low unemployment rates stoke wage pressures. Stay tuned as these dynamics unfold, and watch how they may impact forex markets.
From the chart AUDUSD above, the overall trend is bearish - especially considering the direction of the Moving Average array. Therefore, the next action is to find a reliable entry point based on a confluence of technical analysis factors. My confluences, in this case, include the following;
The safe conclusion from all of these is that there is a high likelihood of a bearish continuation from the area of these confluences.
Analyst’s Expectations:
Direction: Bearish
Target: 0.65531
Invalidation: 0.68248
The weakening of the Australian economy is expected to impact positively on the GBPAUD pair. There are also a few interesting confluences to consider, namely;
Overall, bullish price action seems the most credible direction for price.
Analyst’s Expectations:
Direction: Bullish
Target: 1.89720
Invalidation: 1.83911
As I mentioned, the fundamental factors based on the GDP figures largely suggest a bullish sentiment on pairs against the AUD. This pleads an interesting case in favor of a bullish price action on EURAUD, akin to what we saw on GBPAUD. The confluences for this bullish price action include;
Analyst’s Expectations:
Direction: Bullish
Target: 1.63880
Invalidation: 1.58443
The trading of CFDs comes at a risk. Thus, to succeed, you have to manage risks properly. To avoid costly mistakes while you look to trade these opportunities, be sure to do your due diligence and manage your risk appropriately.
You can access more of such trade ideas and prompt market updates on the telegram channel.
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Hello again my friends, it’s time for another episode of “What to Trade,” this time, for the month of April. As usual, I present to you some of my most anticipated trade ideas for the month of April, according to my technical analysis style. I therefore encourage you to do your due diligence, as always, and manage your risks appropriately.
Bearish scenario: Sell below 1.0820 / 1.0841... Bullish scenario: Buy above 1.0827...
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Don’t waste your time – keep track of how NFP affects the US dollar and profit!
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