MARKETS TREND
The market trend factors in multiple indicators, including Simple Moving Average, Exponential Moving Average, Pivot Point, Bollinger Bands, Relative Strength Index, and Stochastic.
The AUD to USD rate resumed the decline yesterday as Donald Trump announced an increase in China tariffs to 20%, which might send AUD/USD to 0.60.
Will tariffs hamper China’s economic growth?
Since October 2024, the AUD/USD pair has faced persistent downward pressure, primarily due to U.S. dollar strength. Yesterday, it declined again after failing to break above key moving averages, but this time, the drop was triggered by the U.S. trade tariffs on China, Australia’s largest trading partner.
AUD/USD Chart Daily – MAs Keeping Buyers Under Control
Despite a brief recovery in February, where the pair managed to climb above 0.6250, buyers struggled to maintain momentum. The 50 SMA on the daily chart acted as strong resistance, preventing further upside. Similarly, on the daily chart, moving averages have consistently pushed prices lower since late January, making it difficult for bulls to regain control.
In February, AUD/USD broke below its 2022 lows, dropping to levels not seen since 2020, falling under 0.61. The continued inability to break through resistance suggests that bearish sentiment remains dominant.
Australian January Retail Sales – Key Data
January Retail Sales:+0.3% (in line with expectations).
December Retail Sales (Revised):-0.1% (previous contraction).
Retail sales rebounded in January after a weak December, meeting forecasts at 0.3% growth. While the recovery is positive, it remains modest, suggesting consumer spending is still fragile amid higher interest rates and economic uncertainty. The data is unlikely to shift the RBA’s cautious stance on monetary policy.
RBA February Meeting Minutes – Key Takeaways
Rate Cut Considered: The board viewed a rate cut as the stronger case but remained cautious.
Downside Risks Prioritized: Concern over economic weakness led to increased focus on risks of keeping policy too tight.
Not Committed to Further Cuts: The decision to lower rates did not imply a commitment to more reductions.
Inflation Uncertainty: If inflation remains persistent, rates could stay at 4.1% longer or even be raised.
Labour Market Considerations: Some members questioned if there was more slack in the job market than previously thought.
Household Consumption Risks: Uncertainty remained over the recovery in consumer spending.
Reasons to Hold Rates Steady: A strong labour market was the primary argument against a cut, as its tightness conflicted with the 2.5% inflation target.
The RBA leaned toward a rate cut due to easing inflation and wage growth but exercised caution amid labour market strength and inflation risks. While further cuts remain uncertain, the board acknowledged that rates could stay at 4.1% longer than expected if inflation proves stubborn. However, with the new tariffs on China, the RBA will turn increasingly dovish.
Skerdian Meta Lead Analyst.
Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.
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