Global macro overview for 12/10/2018
The RBA has published the latest report on the financial stability of the country. In general, it can be said that the central bank is not afraid of internal conditions, but more about the impact of global events on the economy. The country is developing at a good pace, although there has been a slowdown in the real estate market, where the sentiment has become more cautious. The current fall in house prices is small in relation to the scale of previous increases. A sharp or strong drop in prices could jeopardize the country’s financial system and household finances. The level of household debt is high, but it does not seem to be a high risk at the moment. It will only happen if consumption is reduced. Too soon tightening monetary policy (which is unlikely to happen) could damage the real estate market even more.
The risk to global financial stability has increased for several reasons. The biggest one is the commercial tension between the two largest economies in the world. If there is an economic slowdown in China, it could lead to a global recession.
Let’s now take a look at the AUD/USD technical picture at the H4 time frame. The pair did not react properly to the publication of the report and the overall volatility did not increase much. The market is still trading below the technical resistance at the level of 0.7129, but in case of a break out higher, the next target for bulls is seen at the level of 0.7141. The is a clear bearish divergence between the price and the momentum oscillator, so a pullback towards the level of 0.7100 is possible. The larger time frame trend remains bearish.