2016-08-05 13:44:17

Today at 04:30 (GMT+3), the RBA has presented comments on the decision to cut rate to 1.5%, adopted on Tuesday and assessment of the future prospects for the Australian economy and inflation growth.

The RBA expects that core inflation will be below the target level of 2%-3%, in the range of 1.5% to 2.5% by the end of 2018. Earlier, in the May, the Central Bank of Australia stated about the restrain inflation prospects. According to the RBA, slow growth in wages, unused resources in the labour market and the decline in the leasing prices are the factors, which will cause restrain inflation over the next years. The RBA believes that GDP growth will continue and the mining sector of the Australian economy will recover from the prolonged slump, which was caused by the reduction of investments.

Financial markets are aware of probability of the rate cut before the end of this year. However, the Australian dollar rose this Friday, although the RBA indicated that further decline in the interest rate is possible. The rise could have been caused by two reasons: currency market has already incorporated into price possibility of the interest rates decrease; or market participants are expecting the data on jobs outside US agricultural sector, which will be released today at 15:30 (GMT+3). It is expected that the number of new jobs in July will be 180.000 and unemployment rate will fall by 0.1% to 4.8%.

US labor market report will affect movement direction of all currencies next week.
If the data turns out to be below the forecast, the USD will fall in the market, because market participants expectations of rise in the USD and interest rate hike in the USA will decrease significantly.

AUD/USD: RBA may reduce interest rate again. Fundamental analysis for 05.08.2016.