Today, the last meeting of the Reserve Bank of Australia, the members of which did not present any surprises, took place. The regulator listed the existing risks and noted some progress, in particular in the labor market. But in general, the rhetoric was balanced, without any hints of a "hawkish" or "pigeon" character.
Nevertheless, the Australian dollar reacted positively to this meeting. In tandem with the American currency, it updated the multi-month highs, testing the 74th figure. In my opinion, such dynamics is only indirectly related to the December meeting of the RBA. The regulator retained the status quo, and for the development of the northern AUD / USD dynamics, more was not required of it. After all, the main locomotive of the growth of Aussie is China, or rather, the prospects for the American-Chinese truce.
The financial world reacted calmly enough to the outcome of the G-20 summit. Contrary to ghostly hopes, the United States and China did not make a trade deal, although the parties worked on developing it for several weeks. But in such a relatively short time, the working group failed to resolve large-scale contradictions, so the leaders of the superpowers had to hold a meeting at the G20 "in a warm friendly atmosphere", but without practical benefit. The fact that Trump agreed not to introduce new duties can be ignored, since he himself initiated them literally one week before the summit. In other words, the foreign exchange market reacted quite adequately to the results of the Argentine meeting, since the de facto parties only agreed to work on the draft transaction.
The Australian dollar has become an exception in this context. Over the past ten years, China has been Australia's largest trading partner, both in export and in import. The second largest trading partner is the United States, bilateral trade between countries amounts to tens of billions of dollars. Therefore, many months of confrontation between the United States and China have a negative effect on the economy of the island nation, and the Australian dollar, in turn, painfully reacts to any manifestations of an escalation of a trade war. For example, when Trump announced his intention to introduce additional duties of $ 237 billion, the AUD / USD pair lost over a hundred points in a few hours.
Now that the light at the end of the tunnel was looming for AUD / USD traders, the Aussie shot overcoming strong resistance levels. This is despite the fact that negotiations at a high representative level (for example, the Chinese delegation will be headed by the Vice Premier of the PRC) will only begin on December 15, and now there is only the intention of the leaders of the countries to reach a compromise. Yesterday, US Treasury Secretary Stephen Mnuchin, on one of the TV channels, said that the Chinese had expressed their willingness to open local markets for American business. He did not dwell on other details of the future deal, limiting himself to general phrases. Apparently, he himself is not sure about the results of the upcoming three-month negotiations and even more so he cannot know about specific compromise solutions. "Soon we will understand whether we can make a bargain," said Mnuchin.
But his "chief" Donald Trump was more optimistic in his assessments. Using the usual method of communication, Twitter, he said that the Argentine meeting with Xi Jinping was "just incredible." According to him, the Chinese will benefit greatly if the deal is concluded, and future relations will be built on equal terms.
Thus, the Australian dollar is growing "in advance", only on the optimism of the leaders of the United States and China, and also on the eve of bilateral negotiations. The position of the RBA allows the bulls AUD / USD to build up muscles. The regulator said today that it expects a gradual increase in wages and a gradual increase in inflation. In addition, the Central Bank stated that the labor market is still showing strong results, so the positive dynamics in this area will continue.
As a counterbalance to such optimistic estimates, the regulator added that household income growth rates are still low, while debt levels are quite high. This problem has already existed for a long time (at least a few years), but it does not bother the RBA enough to change the parameters of monetary policy towards easing. In other words, the weighted position of the Australian Central Bank against the background of the G20 totals allows Aussie to continue to demonstrate the northern mood.
From a technical point of view, the situation is as follows. The price of AUD / USD is traded in an upward trend movement, which is confirmed by the fact that it is above the Kumo cloud of the Ichimoku Kinko Hyo indicator and all the lines of this indicator (on the daily chart). A confirmation of the bullish mood is the fact that the price is on the upper line of the Bollinger Bands indicator, which shows the expanded channel. In turn, the MACD and Stochastic oscillators also talk about the priority of the northern movement, as they are in the overbought area. Thus, the aim of the upward testing is the upper line of the Bollinger Bands indicator, which corresponds to the mark of 0.7450. The level of support is the Tenkan-sen line (on D1) and the mark of 0.7300.
