It has been a mixed result for the Australia Dollar this week, with a large degree of volatility in the currency market. Although the Australian Dollar experienced a rapid decrease against the Pound earlier this week due to an unexpectedly high CPI figure out of the UK Tuesday evening, it has managed to hold its’ ground against the Euro, experiencing minor swings in its’ value against the European currency over the past week. The Aussie has also managed to increase its’ value against the ‘Kiwi’’ earlier this week, resulting from a miss in the New Zealand CPI targeted figure and has since continued to move up. The Australian Dollar has however, fallen against the Greenback from trading above the 0.94 US cent mark at the start of the week, to settling in the mid 0.93’s today.
Yesterday the Euro-Zone reported on their current inflation levels, which has been very low earlier in the year. They targeted 0.8% as a Core annualised CPI figure and 0.5% as a year-over-year CPI figure in order to remain unchanged from the previous month. The result was exactly as expected indicating that perhaps the low inflation problem of the Euro-Zone may be beginning to recover. This caused Euro to gain about a quarter of a percent against the AUD overnight, however, the Euro is still under pressure to decrease over the past couple of months due to the monetary policy being implemented by Mario Draghi, Head of the European Central Bank.
Last night the Bank of Canada announced their Rate Decision which fell in line with expectations of keeping the cash rate on hold at 1.0%. Tomorrow night will see the release of the Canadian CPI figures. The year-on-year figure is expected to remain unchanged at a healthy 2.3%, however any variation from this figure is likely to add volatility to the AUD to CAD currency pairing as the ‘Loonie’ battles for parity.
Next week is shaping up to be another volatile week on the currency market, with major economic releases expected from all economies. The initial major announcement will occur Tuesday evening when the US post their current inflation figures, an economic indicator which has proved to be a massive market mover this week.