It looks like it may be a tough week for the AUD as the lack of local data will provide no potential strength for the AUD to recover from the losses it has received against the majors over recent days.
The AUD lost all the grounds it made against the USD and GBP within three days, giving it all back. Contributing factors were the record low commodities pricing including copper and iron ore, the slowing Chinese economy with weak data releases from our major trading partner released last week in the form of CNY Consumer Price Index (CPI) at a reduced rate to 2.0% down from the previous months result of 2.2% and further poor data out of China over the weekend including Industrial Production at 6.9% and Retail Sales at 11.9%, both with decreases from the previous period, which is a less than positive outlook for the Chinese economy.
Yesterday saw the AUD lose approximately 0.5% against the USD. The pair now well below the technical range it has been trending in since March and saw it drop below the 0.90 US Cent mark. Investors will be waiting for the much anticipated US Federal Open Market Committee Interest Rate Decision on Thursday night, as there has been much speculation that the Fed’s must start talking of Interest Rate rises in the short term future. Prior to the release of this Decision on Wednesday night we will have the USD Consumer Price Index forecast for a result of 1.9%. As an important inflationary indicator this is an important factor in the decision process for any potential rate increases.
The USA released negative Industrial and Manufacturing Data overnight both below the forecast and the previous month, however this didn’t give the AUD any significant strength back against the USD as the AUD is still sitting at 0.9029 US Cents this morning at 8:00 am AEST.
The AUD GBP pairing has been moving up and down with fluctuations we would normally see weekly, on a daily basis as investors become increasingly nervous over the pending Scottish Referendum that will be decided this Thursday night. Prior to vote we still have a significant volume of important market movers out of the UK with GBP Consumer Price index (CPI) out tonight and the Bank of England (BoE) minutes out Wednesday night. The AUD made a marginal gain back off the UK Pound by approximately 0.25% however with no significant economic indicators out for Australia this week, it will be difficult for it to hold on to any marginal gains and is likely to fluctuate significantly with any UK news based on Scottish Referendum Poles.