The Australian Dollar rose after today’s economic data and minutes from the central bank. The house price index for the second quarter fell by minus 0.7%. This was a narrower decline than the 7.0% traders were expecting initially. This index measures the average house prices in the eight cities of Australia.
In recent months, the housing market in the country have been unfavourable. Sydney and Melbourne house prices have fallen this year. This was because of a combination of increased supply and low demand. Traders are hopeful that the housing in the cities will start rising following the decision by neighbouring New Zealand to halt ban foreign home purchases. In recent years, many Asian, European, and American tycoons have moved to purchase real estate in New Zealand. They see the country as an ideal escape point because of the fact that New Zealand does not have any enemies. Therefore, with New Zealand being out of the market, these wealthy buyers are likely to move to Australia.
The positive economic data came as the Reserve Bank of Australia (RBA) released the minutes for the meeting held earlier this month. The officials expressed optimism about the global economy, particularly in the United States, Europe, and smaller Asian countries. They however expressed their concerns about the ongoing trade conflict between the largest economies. On the Australian economy, the officials said that the economy of the Western part of Australia had improved after a period of declines. On interest rates hikes, the members said that:
‘Based on the forecasts and associated risks, members assessed that the current stance of monetary policy would continue to support economic growth and allow for further progress to be made in reducing the unemployment rate and returning inflation towards the midpoint of the target. In these circumstances, members continued to agree that the next move in the cash rate would more likely be an increase than a decrease. However, since progress on unemployment and inflation was likely to be gradual, they also agreed there was no strong case for a near-term adjustment in monetary policy.’
After months of decline, the AUD/USD pair reached a low of 0.7087. Since then, the pair has moved up, albeit slowly. Today, it rose after the housing price data and the statement from the RBA. It has reached 0.7190. On the daily chart below, the current price is at the middle Bollinger Band with the RSI being at 47. Higher movements of the pair will see it test the 0.7350 resistance while lower movements will see it test the 0.7020 support.