Australia’s central bank said the outlook for the currency and China are key uncertainties to its growth and inflation forecasts, which were otherwise little changed. The Reserve Bank of Australia, in its quarterly statement Friday, predicted annual growth of 2.5 percent to 3.5 percent through December, accelerating to around 3 percent to 4 percent in 2018. There was little near-term change for unemployment and core inflation was expected to remain below 2 percent for most of the forecast period through 2018. It gave no interest-rate guidance after cutting to a record-low 1.5 percent Tuesday.
While the currency is forecast to remain at current levels, “it represents a significant source of uncertainty” given its potential to react to changed growth outlooks, commodity prices and policy decisions at home or abroad, the RBA said. Meanwhile, China, Australia’s key trading partner, “remains an important source of uncertainty” -- from a possible slowdown in the property market to how authorities balance supporting growth while enacting disruptive reforms.
Governor Glenn Stevens and his board eased policy twice this year to try to keep a lid on a currency circled by yield-hungry investors in a world of zero or negative rates, and to speed up inflation. At the same time, they’ve made progress on steering the economy toward services from mining, with growth above 3 percent and unemployment under 6 percent.
Aussie is currently being traded around 0.76 handle. Pair is likely to find support around 0.7550 area, while resistance can be expected near 0.7660 level.
