Today, the April meeting of the Reserve Bank of Australia passed quietly and imperceptibly. Even against an empty economic calendar, traders indifferently perceived the event.
In general, the Australian regulator did not present any surprises. The central bank expectedly left the interest rate at 1.5%, while taking a wait-and-see approach to the prospects for monetary policy. Also, the RBA expressed concern about the level of consumer activity in households, and also forecast a slight increase in inflation in the foreseeable future.
Thus, the regulator repeated its rhetoric, which was voiced at previous meetings. The central bank did not dramatize the situation due to a slight increase in unemployment in February, and also did not focus on the downward dynamics of the commodity market. This "silent optimism" provided temporary support to the Australian dollar, and the currency pair AUD / USD was able to grow into the area of the 77th figure. However, the fundamental background now does not contribute to a large-scale price increase. The "pass-through" meeting of the RBA can not become a catalyst for the northern trend, and the remaining fundamental factors play against the "Aussie".
Let me remind you that since the beginning of March, the currency pair AUD / USD regularly storms the 77th figure, but it does not work for traders to gain a foothold in this area (and even more so to go higher). As a result, the pair fluctuates in a wide-range flat in anticipation of a powerful news driver. The bulls of the pair were not helped even by Trump, who brought Australia to the "white list" regarding the effect of new duties on steel and aluminum. The cheap US currency sometimes provides temporary support for AUD / USD, but the Australian does not have its own growth drivers.
Moreover, the situation on the commodity market continues to deteriorate. The cost of a ton of iron ore has already fallen to 64 dollars (by comparison, at the end of February, a ton was worth $ 78), while copper is trading around 6500-6750 dollars (in February this figure was consistently higher than $ 7000). According to some experts, the cost of iron ore in the second half of the year may drop to $ 50 amid a general decline in demand and an oversupply of supply.
Leading global mining companies (Rio Tinto and Fortescue) show a decline, and Australian giant BHP Billiton for the first time in six months ended the month in a "minus". The stock of imported iron ore in Chinese ports this week turned out to be at the maximum level (162 million tons), while the PRC authorities announced that they would take further measures to reduce steelmaking capacity.
In addition, the market "in anticipation" of the aggravation of US-China trade relations. The reduction in world trade volumes will inevitably affect the world steel industry, which in turn will reduce the demand for iron ore. Thus, under threat of falling is the largest export item of the budget of Australia. The oil market is also showing a decline as the US stock market declines (which in turn collapsed because of Trump's harsh statements about Amazon and Apple's intention to abandon Intel's components).
Another risk factor for the Australian currency is the trade war between the US and China. Despite ongoing negotiations, the sides are increasingly expressing negative comments on the prospects for trade relations.
For example, the Chinese ambassador to the United States yesterday announced that the countermeasures announced last week are a response to the enactment of section 232 of the Trade Expansion Act of 1962 (that is, the introduction of new tariffs for aluminum and steel). And if Donald Trump decides to turn to Article 301 of the Trade Law, the Chinese will prepare a "mirror response in a similar volume." This is an investigation into China regarding the facts of illegal trade. The White House suspects the Celestial Empire in many "sins". Here, and the theft of intellectual property, and dumping, and state subsidization of exports, and the ultimatum conditions for admission to the domestic financial market of China, and much more. As a result of the investigation, Trump can significantly increase duties, as well as resort to revoking licenses for doing business in the States.
As we see, the situation is still very far from its resolution. Americans are threatened with 301st article, the Chinese promise mirror countermeasures, while Donald Trump and Xi Jinping are still over the fight.
Such a fundamental background is absolutely not conducive to the growth of the Australian currency. The behavior of the currency pair AUD / USD will largely depend on the Friday Non Farms. However, there is no own strength for further strengthening of the Australian currency. Therefore, for short and medium-term trading, short positions should be considered, especially with the northern price retracements.
