RBA Hold At 1.5%, Maintain Confidence With Employment
Matt Simpson April 2, 2019 5:04 AM
Overall the statement remains fairly-balanced, although it continues to appear that RBA’s confidence in the labour market is fending off a dovish stance. We still see potantial for AUD/NZD's bullish wedge to play out.
Summary of RBA’s Monetary Policy Decision (April 2019):
- Rates unchanged at 1.5%
- Growth in international trade has declined
- Long-term bond yields have declined further, consistent with the subdued outlook for inflation and lower expectations for future policy rates in a number of advanced economies.
- The Australian labour market remains strong
- GDP points to a softer picture for the economy
- Central scenario is for underlying inflation to be 2% this year and 2.25% in 2020
Overall the statement remains fairly-balanced, although it continues to appear that RBA’s confidence in the labour market is fending off a dovish stance. So, if we’re to see labour data soften, expect calls for a rate-cut to increase and AUD to face renewed pressure. AUD is currently the second weakest major behind NZD today, although volatility currently remains contained overall.
AUD/NZD has found resistance at 1.0500 following the meeting and the four-hour chart is trying to carve out a bearish outside candle. There’s potential for weakness over the near-term, although we remain bullish above 1.0400 due to the intraday trend structure.
Moreover, the cross is trying to carve out a bullish trend after confirming a bullish wedge reversal following RBNZ’s dovish meeting last week. Whilst the yield differential is favourable to NZD with a 25bps advantage over RBA’s cash rate, AUD/NZD moved higher as traders tried to adjust for the increased likelihood of an RBNZ cut whilst RBA remains neutral.
Ultimately, the bullish wedge projects an approximate target back around the 1.0670 highs, so bulls could consider setups following signs of consolidation or retracement towards key levels of support.
Disclaimer: StoneX Financial Ltd (trading as "Forex.com") is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, Forex.com does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by Forex.com or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although Forex.com is not specifically prevented from dealing before providing this material, Forex.com does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.
For further details see our full non-independent research disclaimer and quarterly summary.