The August meeting of the Reserve Bank of Australia was "passing": the regulator did not panic about the outbreak of coronavirus in Victoria (although it noted this fact in its accompanying statement), maintaining a "moderately optimistic" attitude. Considering the recent macroeconomic and "coronavirus" events, many experts were confident that the RBA would voice more "dovish" rhetoric - right up to the announcement of monetary policy easing. However, that did not happen. This fact allowed the Australian currency to stay afloat: the Aussie, paired with the US currency, remained within the 71st figure and is even showing character at the moment, trying to test the resistance level of 0.7150.
Apparently, the AUD/USD pair will move in the wake of the US dollar in the near future. The controversial rhetoric of the accompanying RBA statement did not help either the pair's bears or bulls. On the one hand, the regulator retained certain optimism, despite the disastrous data on the labor market and a record decline in inflation in the second quarter.
On the other hand, the Central Bank did not ignore the situation in Victoria. According to Philip Lowe, the tightening of quarantine measures in this region will affect the recovery of the labor market in the country (let me remind you that this state is the largest container port in Australia). In addition, the RBA started talking about the uneven recovery of labor market indicators in June again - with an increase in part-time employment, full employment declined. This fact worried the RBA members. According to the updated forecasts (taking into account the situation in Melbourne in particular and in Victoria in general), the unemployment rate in the coming months will rise to about 10%.
The Central Bank members reiterated that the economy is going through a "very difficult period". At the same time, they acknowledged that the measures taken in mid-March to stimulate the economy are paying off - the key macroeconomic indicators are slowly recovering. Philip Lowe said that a stronger recovery is "possible," but only if progress is made to contain the coronavirus. Summing up the above, he emphasized that the current parameters of monetary policy will be maintained until inflation and the labor market show steady and stable growth.
In addition, the Australian Central Bank welcomed the government's decision to extend the stimulus program. Let me remind you that after several weeks of discussions, the Australian Prime Minister announced at the end of July that the JobKeeper and JobSeeker programs would be extended (initially they were calculated until September). However, subsidies will now be paid at a reduced rate and according to stricter criteria, so that support is provided only to those who, according to the government, really need help. Despite such innovations, the RBA members positively perceived the ministers' decision, since the fate of the above programs "hung in the balance".
In general, the rhetoric of the August meeting of the Reserve Bank of Australia practically did not differ from the rhetoric of the July meeting. However, the RBA members focused their attention on the outbreak of coronavirus in Victoria, but did not overly dramatize the situation. Therefore, the Australian dollar practically did not react to the results of today's meeting.
Most likely, AUD/USD traders will switch to American events in the near future, focusing accordingly on the dynamics of the US dollar. Let me remind you that the United States has been discussing a bill on additional financial support for the American economy for the second week. Democrats and Republicans still cannot agree on a common position. According to the Speaker of the House of Representatives, Nancy Pelosi, yesterday's negotiations "were productive", and they will continue today with the participation of representatives of the White House. However, she expressed doubts that a compromise will be reached this week. As noted by Palosi, this will "most likely not happen until next week, and maybe later."
In connection to this, the US currency reacted negatively: the dollar index fell again, which allowed the bulls of the AUD/USD pair to approach the resistance level of 0.7150. Further dynamics of the "Aussie" will also completely depend on the further "well-being" of the dollar.
Technically, the pair on the daily chart is between the middle and lower lines of the Bollinger Bands indicator, as well as on the Tenkan-sen line of the Ichimoku Kinko Hyo indicator. If the price consolidates above the level of 0.7150, the above indicator will form a bullish signal "Parade Line" again. In this case, the probability of price growth to the "round" level of 0.7200 and then to the main resistance level of 0.7228 will increase. This is the upper line of the Bollinger Bands indicator, as well as the 17-month price maximum.
