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AUD/USD climbs ahead of the Reserve Bank of Australia

H.S. Borji
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AUD/USD climbs ahead of the Reserve Bank of Australia

The Australian dollar climbed modestly against its US counterpart in Monday’s Asian session, as investors traded cautiously ahead of a key rate statement from the Reserve Bank of Australia.

The AUDUSD climbed 0.13 percent to 0.9323, after reaching a daily low of 0.9305. Initial support is located at 0.9280 and resistance at 09343.

The AUDUSD is hovering above its long-run averages of 0.9301 (100-day simple moving average) and 0.9303 (200-day simple moving average).

The pair has declined more than 0.6 percent over the past five days as stronger demand for the US dollar kept the greenback elevated across the board.

The US dollar index, a weighted average of the greenback’s performance against a basket of currencies, has advanced more than 1.3 percent since July 4. The index suffered a slight setback Friday after US job creation slowed last month, while the unemployment rate unexpectedly rose.

US nonfarm payrolls increased 209,000 in July, following an upwardly revised gain of 298,000 the previous month, the US government reported on Friday. The consensus estimates ranged from 230,000 to 271,000.

The unemployment rate edged up 0.1 percentage points to 6.2 percent as more people entered the workforce.

In Australian data, retail sales rebounded sharply in June, after unusually mild weather during May led to a surprise fall in retail purchases.

Australian retail sales advanced 0.6 percent in June, following a 0.3 percent drop the previous month, the government’s statistics bureau reported today. A median estimate of economists called for a gain of 0.4 percent.

Sales of household goods led the advance, rising 1.7 percent following a 0.2 percent increase the previous month.

Clothing, footwear and personal accessory sales climbed 1.4 percent after declining 2.8 percent the previous month.

Separately, a gauge of Australian consumer prices showed inflation slowed in July, an encouraging sign for policymakers looking to keep monetary policy accommodative.

TD Securities’ gauge of Australian inflation increased 0.2 percent in June, following no change the previous month. As a result, annual consumer inflation fell from 3 percent to 2.6 percent.

Last month the Australian Bureau of Statistics said consumer inflation increased at an annual rate 3 percent, the upper edge of the RBA’s target range and the highest level in two-and-a-half years.

The Reserve Bank of Australia, which targets inflation at 2-3 percent annually, is seeking a “period of stability” in order to revive the Australian economy, which is suffering from a slowdown in mining investment and rising unemployment.

Higher consumer prices this year have thwarted expectations for lower interest rates. The RBA has held its benchmark lending rate at 2.5 percent since August 7, 2013. On Tuesday the central bank is expected to keep interest rates unchanged for the twelfth consecutive month.

In other trading, the Aussie pushed higher against the New Zealand dollar, as the AUDNZD climbed 0.06 percent to 1.0948. Initial support is located at 1.0917. Initial resistance is found at 1.0975.

Statistics New Zealand will report on second quarter unemployment on Tuesday. Unemployment is forecast to have declined 0.2 percentage points to 5.8 percent between April and June.

The AUDJPY advanced 0.14 percent to 95.68. Initial support is likely found at 95.29 and resistance at 95.82.

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