The Australian dollar fell sharply today in the Asian session, but then regained its position against the US dollar after the Reserve Bank of Australia introduced its new economic forecast.

According to the report, the forecast for GDP growth in December this year was reduced to 2% -3% per annum against 2.5% -3.5% per annum. The RBA also lowered the forecast for economic growth in June 2018 to 2.5% -3.5% per annum against 2.75% -3.75% per annum earlier. The forecast for June 2019 was upgraded. The growth is expected up to 3% -4% per annum against 2.75% -3.75% per annum earlier.

The main reason for the decline in forecasts, even though many economists had expected such a scenario, was due to the recent strengthening of the Australian currency. The RBA noted that all forecasts are based on current exchange rates.

As for inflation, the RBA raised its forecast in December 2018 to 1.75% -2.75% per annum against 1.5% -2.5% per annum earlier. The forecast for core inflation remained unchanged. The main increase in the forecast for inflation is associated with an increase in prices for utilities.

The RBA also expects unemployment in the forecast period to remain at 5% -6%.

A positive moment for traders was the statement of the regulator that the economy as a whole is developing in accordance with expectations, and in the second quarter of this year, stronger GDP growth is expected. Thanks to this, the Australian dollar managed to quickly recover all the lost positions against the US dollar.

The report on retail sales in Australia was much better than the forecasts of economists, which also affected the rate of the Australian dollar.

According to the statistics agency, retail sales in Australia in June this year rose by 0.3%, while economists expected growth of only 0.2%. In the second quarter of this year, retail sales grew by 1.5%, while growth was expected to be only 1.2%.

Such good data will undoubtedly have a positive impact on the final results on GDP growth for the 2nd quarter of this year.

As for the technical picture of the AUD/USD pair, a small correction this week has so far brought the trading instrument only to the middle of the channel 0.7880-0.8060. A return to the support level of 0.7960 could hit the stop-orders of the major buyers of the Australian dollar, which will resume the downward trend, which will lead to the lower border area of 0.7880. In case the bulls manage today to keep the pair above 0.7960, we can count on the continued growth of the Australian dollar in the area of 0.8000 and 0.8060 as early as next week.