09:45, 23 November

Showing Positive Signs Above 0.7150 as IMF Reports

Even though it has eased a little this week the AUDUSD has made some solid ground over the last few weeks reversing from support at 0.7050 and moving up to a three month high above 0.73 recently. It has eased a little but rallied well a couple of days ago to make the push back up towards the 0.73 level. It appears the 0.73 level is starting to play a role as several times now over the last few months there has been selling pressure from around this level repelling prices lower. Just prior to its recent push higher the AUDUSD had been quite content to take a breather and enjoy solid support from 0.7050 as it has traded along that level for several weeks, although it did drop a little lower reaching a 2½ year low several weeks ago.

After meeting resistance there for several days, the AUDUSD had slowly but surely eased lower from the key 0.7150 level before resting on the support at 0.7050. The 0.7150 level has played a role in the last couple of months as it has bounced off this level several times, and may be called upon again should the AUDUSD continue to decline. Throughout June and July the AUDUSD had been quite content to trade around 0.74 and it previously made a few attempts to break through the resistance at 0.75 however all of these were thwarted. During this period, the significant level at 0.75 loomed like a dark cloud. This same level has previously propped up the currency pair before being broken strongly mid June.

Generally throughout the last couple of years the AUDUSD has traded within reasonably tight ranges of up to six cents, and in the last nine months or so we have seen it push higher to its highest levels in more than two years above 80 US cents. The 80 cents level however has provided a significant obstacle to the AUDUSD as it has met resistance there since the middle of 2017. Repeated attempts to push through the key 80 cents level were short lived and the AUDUSD quickly sold off moving it lower down to its current levels.

The International Monetary Fund's (IMF) believe Australian housing prices are falling at an "orderly" rate and "improving housing affordability", however the US-China trade war could worsen the property downturn.According to the latest report, Australia is on the final leg of its economic recovery since the end of the mining boom.The IMF undertook a two week “mission” to Australia during it which it consulted businesses, academics, officials and regulators.Some of its preliminary findings included that it expects the federal budget to return to balance by the 2019/20 financial year, with surpluses to follow.The IMF is also suggesting that the next rate rise by the Reserve Bank of Australia (RBA) is still some time away.Wages growth has been slow but is expected to rise gradually, along with the cost of living, which has been growing at a slower than expected annual rate of 1.9%.The IMF has suggested that until then, the RBA’s "appropriately accommodative" policy of keeping interest rates at record lows (1.5 per cent) "should remain".The IMF wrote in its report, "Notwithstanding recent strong growth, it is not yet the time to withdraw macroeconomic policy support given remaining slack"