Edward Culchenko
The Australian Dollar (also known as the Aussie) keeps being supported as the probability that the RBA may cut interest rates in 2013 is declining. At this point, market participants assume that the probability of interest rate cuts is below 18% against 50% seen earlier this year.
The size of the possible cuts is decreased as well. While market participants used to anticipate a 1% cut, now they do not believe that it will exceed 0.5% if any interest rate cut actually takes place.
At the same time, the latest macroeconomic reports sound reassuring for the Australian economy. The national GDP and retail sales growing while housing prices are increasing.
Still, the local business conditions and economic confidence seem to have worsened a little bit last month. This is confirmed by the latest research conducted by the NAB. However, there are positive economic signs. They indicate improvement in those industries of the Australian economy that are not related to mining. Still, the situation in the local construction and manufacturing industries is difficult.
HSBC experts are positive on the near-term prospects of the Australian economy. They say the RBA may increase the key interest rate in late 2013.
Forex.
The chart below, courtesy of , reflects the current state of affairs in the market of AUDUSD. The currency pair is rallying.
A break above the local high (1.0333) will give way to further strengthening up to 1.0339 and maybe 1.0344/54, 1.0371. The current bullish move will be completed as soon as the price overcomes the bottom of the MF sloping channel and consolidates below 1.0216 (as shown below).
Edward Culchenko
