AUD/USD was in the red earlier on Tuesday after the release of RBA meeting minutes for August. The pair was trading lower at $0.7308.
Australia’s Economic Stance
According to data published by the Reserve Bank of Australia (RBA), the global economy has continued to recover. Following the largest slump in decades, the global economic recovery has been boosted by substantial fiscal and monetary policy responses. The easing of virus restrictions in some countries also supported the economic recovery.
Members noted that economic recovery in Australia had gained strong momentum. The gross domestic product (GDP), recovered to its pre-pandemic level in the March quarter. The labor market has also remained strong in the June quarter.
However, with the resurgence of coronavirus infections tied to the highly contagious Delta variant, there is a high degree of uncertainty for the outlook of the second half of this year. Economic activity and employment are expected to decline in the September quarter.
With the eventual lifting of restrictions, members are hopeful that the labor market recovery will gain momentum. Underlying inflation is expected to remain decline in the September quarter. However, it is expected to increase gradually to 2 ¼ by the end of 2023.
The board remained committed to highly accommodative monetary conditions to support the growth in the labor market and inflation. In its July meeting, the Board decided to continue with its bond purchase program at a reduced rate of $4 billion a week. It also maintained its cash rate target at 10 basis points.
The AUD/USD pair will react to the US Retail Sales data for July. The retail sales are expected to have declined because of the Delta variant spread, which led to the reimposing of strict lockdown restrictions.
AUD/USD Technical Analysis
On the four-hour chart, the AUD/USD pair has been consolidating between $0.7400 and $0.7136 for the past three weeks. It hit an intraday high of $0.7341 before pulling back.
The currency pair is trading below the 25 and 50-day exponential moving averages, reinforcing a bearish view. Its Relative Strength Index (RSI) stands at 35, which is near the oversold region.
Therefore, the pair is likely to edge lower to find support at $0.72550. However, a move past the price wall at $0.7400, will invalidate the bearish outlook.