AUD/USD breaks out of the narrow range from earlier this month even as the Reserve Bank of Australia (RBA) endorses a wait-and-see approach for monetary policy, but fresh updates to Australia’s Gross Domestic Product (GDP) report may rattle the near-term rebound in the aussie-dollar exchange rate as the growth rate is expected to slow to an annualized 2.5% from 2.8% in the third-quarter of 2017.
A material slowdown in the growth rate may curb the recent advance in AUD/USD as it encourages the RBA to keep the cash rate at the record-low, and the central bank may continue to tame bets for an imminent rate-hike as ‘inflation remains low, with both CPI and underlying inflation running a little below 2 per cent.’ The comments from Governor Philip Lowe and Co. suggest the central bank is in no rush to implement higher borrowing-costs as ‘household incomes are growing slowly and debt levels are high,’ and it seems as though the RBA will continue to jawbone the local currency in 2018 as ‘an appreciating exchange rate would be expected to result in a slower pick-up in economic activity and inflation than currently forecast.’
As a result, the RBA’s wait-and-see approach may keep the broader outlook contained within a wide range especially as the 0.8150 (100% expansion) region continues to offer resistance, but recent price action raises the risk for a larger rebound in the aussie-dollar exchange rate as the bearish momentum carried over from the previous month appears to be abating.
AUD/USD Daily Chart
