The RBA Seems to Be Out Of Touch With Realities On The Ground
Russell Shor | Mar 06, 2019 20:17
Australian Q4 GDP came in at 0.2% below the 0.5% expected. The RBA forecast was 0.6%, which indicates that they may be out of touch with the reality on the ground. Overnight RBA Governor Dr. Lowe maintained that there are plausible scenarios where rates may go up or down. However, odds for a rate cut in October jumped to 67.7% following the GDP release. We have notedprevious article , price has broken below the previous trough (green horizontal). I.e. the chart shows a lower peak followed by a lower trough which is the classical definition of a downtrend. Moreover, the daily RSI(9) (a measurment of the internal strenght of a number series) is below 50 and indicative of an underlying bearish momentum.
The below is the weekly chart of AUDUSD. The longer term timeframe is generally reflective of the underlying economic fundamentals. We note that the EMAs are in a bearish stack. I.e. the green 5-week EMA is below the orange 13-week EMA, and the orange 13-week EMA is below the black 34-week EMA. The RSI(9) is also below 50 and indicative of an underlying bearish momentum. The EMAs are also starting to show angle and separation which is due to a recent acceleration in the weekly downside momentum.
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