The minutes today reveal, yet again, that the picture is mixed. Whilst this may not excite speculators, when you compare this to other economies then it doesn't look too bad really.
- RBA Monetary policy minutes saw the RBA lower headline inflation from 3.25% to 3% and core inflation from 2.75% to 2.5%.
- GDP has been nudged up from 2.75% to 3%. Inflation data risks have been overstated due to 'statistical noise'
- Whilst unemployment may not reduce consistently for some time yet, a lower AUD will add to inflation whilst spare capacity and weak wages growth will detract from inflation.
- And finally, low interest rates will be needed for some time yet.
Overall I take this to mean it's not that great, but not that bad either - let's just stay where we are and see how this pans out. Over the past couple of weeks have had very disappointing CPI which was then followed by good jobs data and positive Chinese data as Iron ore exports continue to set records. So perhaps the 'watch and see' approach from the RBA is the right thing to do.
We can see the markets reaction below (look closely) and you'll see a small 15-pip bullish hammer above 0.9347. Whilst we may see a dip beneath this support level over the say, overall on D1 charts there isn’t anything technically to become concerned about until we break below 0.9320. This would raise the odds of a revisit to the 200-day eMA around 0.925 and the lower bullish channel, which I would expect to entice bullish swing traders.
Back to the intraday chart and the price action appears corrective, so going into next week I suspect we'll continue to the bullish bias.