Australian dollarsAnd Australian dollar / US dollarGovernor of the Reserve Bank of Australia, Michael Bullock, Standard & Poor’s ASX 200 Talking points
- The Australian dollar fell by a fraction after the announcement of the new Reserve Bank of Australia governor
- Michelle Bullock is seen as having excellent central banking pedigree
- RBA policy is likely to remain on track. WHERE TO AUD/American dollar?
Recommended by Daniel McCarthy
Get your free AUD forecast
The Australian dollar fell after Australian Treasury Secretary Jim Chalmers announced that Michelle Bullock will take over as Governor of the Reserve Bank of Australia in September, replacing Philip Lowe.
The currency has since recovered, and the S&P/ASX 200 Australian stock index has settled on higher ground after the positive lead from Wall Street.
Ms. Pollock has been Deputy Governor of the Bank since April 2022 and has been with the Foundation since 1985. She has a reputation as a leading economist in her own right.
The appointment is mostly seen as a steady transfer of leadership at a critical time for RBA monetary policy.
Some monetary policy tourists in the mainstream media said the Bank had raised interest rates unnecessarily aggressively. They may be disappointed with the new ruler if some of her recent comments reflect the continuation of politics.
In her recent speech, she indicated that the unemployment rate may need to reach 4.5% in order to get rid of inflation. It is currently 3.6%.
The implication for the markets is that Australian monetary policy is likely to be run in a similar fashion to the way it has been for several decades, which is a steady hand in the wheel.
Interest rate futures turned less hawkish earlier this week with the six-month portion of the curve erasing 25bps of tightening.
Markets now see little chance of the RBA raising rates at their August meeting but a 25bp hike is expected by the end of the year.
AUD/USD daily chart
AUD/USD chart
AUD/USD has been in a five-month trading range of 0.6459 to 0.6900 and is testing the upper bound in Friday’s trading session.
Resistance could be at the former top 0.6900 and 0.6920 before potential resistance in the 0.7010 – 0.7030 area.
On the downside, support could be at breakout points 0.6818, 0.6806. 0.6803 and 0.6741 before the previous bottom 0.6595.
The recent rally in price has seen a clear breakout above all of the simple moving averages (SMA). This may indicate that an upward trend may develop.
This simple moving average may provide support in the area of 0.6880 to 0.6920. It is rare for all of these SMAs to congregate close to each other and this could be a hint towards an emerging trend.
Recommended by Daniel McCarthy
How to trade AUD/USD
– By Daniel McCarthy, Strategist for DailyFX.com
Please contact Daniel via @employee on Twitter
