Australian Dollar rises sharply this week and achieved its best showing since January.

Rising US Unemployment figures put USD under selling pressure while Australia reported mixed housing data on Friday. Monterey divergences between Fed and RBA might push this pair even higher.

On Friday, the Australian Dollar (AUD) held firm against its US counterpart after weak Nonfarm Payrolls figures but reached its highest point since early January at 0.6740.

Reserve Bank of Australia (RBA) may be one of the final G10 central banks to initiate cuts, providing support for the Australian dollar under these circumstances. Though Australian economic signs appear weakening, persistent inflation prompts RBA hawkishness; encouraging Retail Sales data published earlier in the week indicates an optimistic economic outlook.

Updated daily market movers: Australian Dollar strength remains strong despite slow housing market

Australian housing loan commitments increased 3.1% month over month during March compared to January (which were both 1.0%), though this may indicate rising house prices which affect average loan sizes rather than increased demand for domiciles.
Consumer sentiment surveys reveal sluggish buying sentiment with regard to housing. US Nonfarm Payrolls reported an impressive surge of 206K workers hired, surpassing market estimates by 30K; this increase followed a revised 218K gain in May.
However, these figures have failed to support the USD as expected by markets: unemployment rose slightly to 4.1% (from 4.0%). Wage inflation also fell sharply by 3.9% annually (y-o-y), as measured by changes in AHEs – an outcome widely anticipated.
On the Reserve Bank of Australia side, markets indicate only an approximate 10% chance that interest rates may be raised before year’s end, while with respect to the Federal Reserve they anticipate at least two rate cuts before 2017 comes to an end – depending on labor market data and inflation figures.

Technical analysis: AUD/USD continues its bullish momentum

AUD/USD remains on an upwards momentum, buoyed by strong technical indicators including Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD). As it nears January highs, bullish prospects seem more promising; however, traders should monitor if these indicators begin signalling overbought conditions.

Next on our bullish agenda are resistances at 0.66750 and 0.6880 while supporting levels should include 0.6670, 0.6650 and 0.6630.

Central Bank FAQs
A primary responsibility of a central bank is ensuring price stability within any region or nation they oversee. With economies facing constant inflation or deflation due to goods prices fluctuating widely – constant rising or lowering prices equaling inflation or deflation respectively – its task for central banks like US Federal Reserve, European Central Bank or BoE to maintain demand by altering policy rates accordingly and keep inflation within 2 percent.

An effective means for central banks to control inflation is through changing their benchmark policy rate (also referred to as interest rate). On predetermined occasions, central banks issue statements outlining their policy rate as well as any additional justification they might offer to support their choice (i.e. cutback or increase). Local banks will adjust savings and lending rates accordingly, creating either difficulty for people saving in banks or companies taking out loans and investing their own businesses. When interest rates significantly rise or drop significantly it is known as “monetary tightening”, while when rates decrease it’s known as “monetary easing”.

A central bank should remain politically independent. Members of its policy board undergo multiple panels and hearings before being appointed as board members; every individual in that board often has strong convictions on how the central bank should control inflation and create its subsequent monetary policy; those preferring loose policies involving low rates, cheap lending, economic stimulation measures like stimulus packages as well as inflation just over or slightly above 2% are known as doves; conversely those favoring tighter controls with higher interest rates to reward savings, inflation control at all times as ‘hawks’ who won’t rest until inflation drops below or just above 2% are known as doves; those wanting a loose policy through low rates or cheap lending are known as doves while members preferring tight control on inflation while keeping inflation below or just below this mark are known as hawks who won’t rest until inflation falls back below or just below this mark are known as doves while

Normal meetings usually include a chairman or president to lead them and help create consensus between hawks and doves; their final say would come into play should it come down to an even split vote on whether current policy needs adjustment. Typically, central bank chairman deliver speeches which can often be watched live to convey current monetary stance and outlook. A central bank endeavors to push its monetary policy without precipitating violent swings in rates, equity values or currencies. Central bank members take an aggressive stance toward markets leading up to policy meetings, and are prohibited from talking publicly for several days afterward until any new policies have been announced; this period is known as “blackout period”.