Forex Economic News and Watchlist: AUD/USD

Do you still have the AUD/USD pair on your Watchlist?

Perhaps you should add it back.

That’s in case you removed it due to the selling pressure that pushed prices to break the support level on the 1-hour chart shortly before the release of this economic news, the RBA report.

In case you missed it, the board of the Reserve Bank of Australia, passed to increase the cash rate target by 50 basis points to 85 basis points.

But most importantly, they have increased the interest rate on Exchange Settlement balances by 50 basis points to 75 basis points.

With these increases, there is a greater chance of buyers speculating on pairs with AUD.

Of course, the AUD/USD leading.

If you still want to open BUY positions on the AUD/USD pair after this release, hold your horses and wait at least until it breaks up above the area of value drawn on the 1-hour chart.

2 Reasons Why You Should Buy the AUD/USD and a Reason to Short it.

1). A Stable Growing Economy Backed By Government Policies.

The Australian economy is strong.

In the March quarter, it grew by 0.8 percent and there is a high expectation that it will continue growing up to 3.3% throughout the year.

The Australian Macroeconomic policy settings are supportive of every aspect of the growth and national income is being boosted by higher commodity prices.

This signifies that good terms of trade are at a record high.

If this is not enough reason to continue speculating on the rise of AUD against the USD then maybe this is…

2). The Australian Labor Market is Strong.

As it stands, Australian Employment has grown significantly and the unemployment rate is at 3.9 percent, which is the lowest rate in Australia in almost 50 years.

A Reason to short the pair: Rise in Inflation

While inflation is lower in Australia than in most other advanced economies, the RBA report released earlier today shows that it is higher than earlier expected.

The report also indicates that inflation will continue to increase.

One uncertainty pointed out in the Economic outlook of Australia is how household spending will evolve. Will the purchasing power of the AUD be affected largely?

If there is one thing I learned in BUSINESS SCHOOL, it is that inflation devalues a currency, but hey, DON’T TAKE MY WORD FOR IT. I’m not an economist? I’m just a black-hat blogger at Joon Online. And what do I know?

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