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Despite a slew of fundamental economic data that suggests further weakening of the Australian economy, the Aussie has been remarkably resilient holding bid above the 7100 mark for the better part of the past month. Last night after the RBA left rates on hold at 2% it issued a statement that was relatively sanguine with the central bank noting that while inflation remained low – providing scope for more cuts, “Recent information suggests that the global economy is continuing to grow, though at a slightly lower pace than earlier expected.”
The Australian authorities offered little concern over the recent slowdown in demand in Asia and the sharp falloff in employment data in Australia last month. Some traders speculated that perhaps the RBA officials had an early glimpse at the GDP numbers due later today and that those numbers suggest that growth Down Under remains on pace for the time being.
If that’s true the Aussie could make another run at the 7200 level as fears of a rate cut begin to dissipate and the pair starts to attract carry trade flows. Still any upside remains limited by heavy resistance at the 7300-7400 corridor and Aussie remains rangebound for now.