Minutes of August 4 RBA meeting showed board members “reaffirmed that there was no need to adjust the package of measures in Australia in the current environment.” Nevertheless, they agreed to “continue to assess the evolving situation” and “did not rule out adjusting the current package if circumstances warranted.”
RBA noted that “the worst of the global economic contraction had passed” but outlook remained “highly uncertain”, depending upon containment of the coronavirus. Australia’s downturn “had not been as severe as earlier expected” and “a recovery was under way in most of Australia”. Though, the recovery is likely “slower than earlier expected” too with outbreak in Victoria.
Australia Dollar is trading slightly softer after the release. AUD/JPY has been trading in a triangle pattern since early June. It should be around time for a breakout. At this point, a break above 76.86 resistance is mildly in favor as long as trend line support (now at 75.58) holds. However, the “thrust” following a triangle breakout is usually short-lived and terminal. Hence, attention would be on signs of a quick reversal in this case.
Meanwhile, sustained break of the trend line support will be the first sign of near term bearish reversal. Focus would then be turned to 74.82 support for confirmation.
