10:25, 16 April

Moves to Six Week High above 0.7150 as RBA Remains Baffled

The AUDUSD continues to frustrate many a trader as it continues to move little as it spends most of its time in the range roughly between 0.7050 and 0.7150. However in the last week or so it has slowly crept higher and pushed through the resistance at 0.7150 to reach a six week high near 0.72. It will be interesting to see if the currency pair can now maintain this break and receive a little bit of support from the 0.7150 level. 
Several weeks ago the AUDUSD climbed slowly and steadily higher back above the other key level of 0.7050 and resumed its trading within its right range between 0.7050 and 0.7150.

Back at the end of February, the AUDUSD fell from near 0.72 down to its lowest levels in two months at 0.70 before a healthy rally. For the most part in the last two months, the AUDUSD has traded within a range between 0.7050 and around 0.72, although this has now tightened a little with the resistance around 0.7150 in the last few weeks. In early February the AUDUSD fell back down to support at 0.7050 after meeting stiff resistance at the key 0.73 level, and it is currently relying on support from 0.7050 which has supported the currency pair several times and very well since October 2018.

In the lead up to hitting resistance at 0.73 the AUDUSD rallied well to move past the key 0.7150 level and reach a two month high around 0.73 before easing lower. Just prior to the decline, the AUDUSD had done very well to rally from its lowest level in many years below 0.67 back up to above 0.7150 and beyond. The AUDUSD didn’t finish 2018 very well falling strongly throughout December to hit a three year low just below 0.7050 before dropping sharply down to below 0.67 and regaining lost ground just as quickly as it fell.

For the 33rd month in a row, the Reserve Bank of Australia (RBA) left the official cash rate on hold a couple of weeks ago, as widely expected.  The RBA kept the official cash rate at a record low of 1.5% however a widely expected cut this year “looks inevitable”, many analysts say.  However some recent data has the deputy governor Guy Debelle completely confused.  "The strength of the labour market is at odds with the slow pace of GDP growth," Dr Debelle observed in a speech titled "The State of Economy" last week.  Another piece of the puzzle will be added this week with the release of the latest employment figures.  February delivered much weaker than expected jobs growth, yet the unemployment rate fell below 5% to an 8-year low.  "The two lenses on economic growth provided by the labour market and the GDP data are in stark contrast. A third lens, in the form of business surveys [conditions], sits in between the two," Dr Debelle said.  "The tension highlighted by these different lenses on economic growth is of crucial importance. Hopefully we will get some resolution of this tension in the coming months with the incoming flow of data."