The Reserve Bank of Australia minutes for the April meeting delivered a rather dovish tone as policymakers discussed about further rate cut although they are awaiting more data to confirm such a need. Regarding the decision to keep the cash rate at 2.25%, the central bank noted that, ‘taking all these factors into account, the Board judged that it was appropriate to hold interest rates steady for the time being’. The RBA remained concerned about the housing market and high household leverage. Despite depreciation in the Australian dollar, the central bank expected further decline in the currency.
The rebound from 0.7531 continued last week and edged higher. Further rise cannot be ruled out with 21 crossing 55 EMA upward and SSRC oscillator showing signs of more bullish momentum. But such rebound is viewed as a correction. With 0.7937 resistance intact, the larger down trend is still expected to resume later. Break of 0.7532 will extend the larger decline from 0.9504 to next fibonacci level at 0.7182. However, sustained break of 0.7937 will indicate near term reversal and will turn outlook bullish.
In the week ahead investors will be looking to Wednesday’s Fed statement for clues on the possible timing of a rate increase. Investors will also be focusing on Wednesday’s preliminary reading on U.S. first quarter growth as well as reports on inflation, consumer confidence and manufacturing.