The Australian dollar gained strength against the U.S dollar on Wednesday, supported by the release of upbeat Australian economic growth data and after Reserve Bank of Australia Governor Glenn Stevens said that interest rates are likely to remain on hold. Official data earlier showed that Australia’s gross domestic product expanded by 0.5% in the second quarter, exceeding expectations for 0.4% growth. In the first quarter, Australia’s GDP expanded by 1.1%.
Meanwhile, RBA Governor Glenn Stevens said that “a very accomodative interest rate structure and a degree of stability and predictability have been in place for some time,” signaling that interest rates are likely to remain unchanged for an extended period of time. Mr. Stevens was speaking at the Committee for Economic Development of Australia Luncheon, in Adelaide. The comments came a day after the RBA held its benchmark interest rate at a record-low 2.50%, in a widely expected move and said that the overvalued Australian dollar is weighing on efforts to support growth.
Intraday bias remains on the upside as 21 and 55 EMA trend indicators are crossed upward signalling a buy trend is established. SSRC, Stochastic, RSI and MACD oscillator indicators are showing bullish momentum is still intact. Also price is successfully trading above the weekly pivot point which signals bullish strength in the pair. With this simple technical analysis, i will be expecting more demand to weekly R1 and probably R2 (0.93815 and 0.94281).
An important fundamental indicator to watch out for tomorrow is the Australian Retail Sales, Australian Trade Balance, the USD ADP Non Farm Employment Change (a short-cut to NFP) and USD trade Balance.