Global macro overview for 12/02/2016:
In his yesterday's testimony before the House of Representatives Economics Committee, RBA Governor Glenn Stevens said: "It's, I think, pretty unlikely we're going to be raising rates any time soon". Moreover, he referred to the weakening Australian dollar and added that easing is possible, if inflation slows and global headwinds threaten Australia's growth trajectory. Due to the weakening Australian dollar (which is following falling commodity prices), the inflation is unlikely to cause near-term issues as the RBA cut the official cash rate two times last year already. In conclusion, in the current situation RBA does not see the need to cut the interest rates any lower and will be watching developments in China for any signs of a more than expected slowdown.
Let's take a look at the technical picture of AUD/USD after the Stevens' testimony. The pair has bounced from 0.7000 support level and now is trying to get back above 0.7142 resistance level. Please notice the possible head-and-shoulders pattern might be in progress with the neck line at the previously mentioned 0.7000 level.
