Yesterday, Governor Stevens, Head of the Reserve Bank of Australia made a speech in Sydney. He commented that the G-20 growth agenda may assist recoveries but failed to comment directly on the Australian Dollar. The AUD moved up about a quarter of a percent across the currency board following the speech. Last night the US presented their current inflation levels through the release of their Consumer Price Index figures. They were anticipating no change to the previous year-on-year CPI figure of 2.1% and the result was exactly as expected.
The major release out of Australia today is associated with Australia’s inflation. The economic forecast is that we will see an increase from the previous month’s annualised figure of 2.9% to 3.0%. Although it is at the higher end of the spectrum, this targeted figure is still within the RBA’s long-term targeted inflation range of 2-3%. The CPI figure was a major market mover last week, emphasising it’s’ importance and ability in fluctuating currency levels and a beat or a miss on the targeted 3.0% figure is likely to support or inhibit the AUD strength.
Tonight the Bank of England Minutes will be made public and the Pound is likely to gain strength across the currency board if the underlying tone is that the BoE are even closer to an interest rate hike in the near future. Last week the UK posted a significantly higher inflation figure than expected which caused immediate gains to the value of the GBP and indicated that perhaps a rate rise may actually occur sooner than expected. The UK Gross Domestic Product may also add strength to the Sterling late in the week if they improve on their previous month’s year-on-year GDP figure of 3.0%.
The major economic release tomorrow will occur out of New Zealand when the Reserve Bank of New Zealand announces their Rate Decision. The cash rate is currently sitting at 3.25% and the economic forecast is that we will see another rate rise to increase the RBNZ rate to 3.5%. This is likely to cause significant strength to the New Zealand Dollar and will certainly add to volatility between the AUD-NZD currency pairing this week.
With the next 24 hours producing a number of high-tier economic releases, we can expect the Australian Dollar to make mixed movements against the majors and minors, depending upon the results from both the domestic and international data.