Australian Dollar (AUD) Experiences Positive Movement Following RBA Rate Decision

The Australian Dollar (AUD) experienced its’ first signs of strength for the week following the Reserve Bank of Australia’s (RBA) Rate Decision and accompanying notes yesterday.

The ‘Aussie’ (AUD) pushed up by approximately half of one percent against the majors yesterday afternoon, following the RBA’s decision to keep rates on hold at 2.5% for the 16th consecutive month. It managed to hold most of the gains overnight against the majors, with the exception of USD with which it lost all the ground and fell by close to half of one percent.

Governor Stevens, Head of the RBA, communicated that ‘in Australia, most data is consistent with moderate growth in the economy’. He also reiterate that ‘monetary policy remains accommodative’ and made mention that ‘the Australian Dollar remains above most estimates of its’ fundamental value’.

Today the Australian economy will release their official Gross Domestic Product (GDP) figure. The annualised Australian GDP is currently sitting at a healthy 3.1% and the forecast is for this to remain unchanged. A result of 3.2% or higher is likely to break the recent trend of a falling Australian Dollar, even if it is only momentarily.

Chinese data in the form of Non-Manufacturing, Composite and Services Purchasing Managers Index (PMI) will also be released today and is likely to sway the value of the AUD.

Australian Dollar to US Dollar (AUD/USD) Exchange Rate Trended Positively Yesterday Afternoon But Falls Again Overnight
The AUD to USD exchange rate has been trending downwards for the past few weeks as a result of falling commodity prices and a strengthening US economy, however the ‘Aussie’ (AUD) found some footing yesterday to gain some ground back against the ‘Greenback’ after reaching a 4.5 year low earlier in the week.

Overnight the ‘Aussie’ (AUD) lost all the ground it made yesterday afternoon and proceeding to fall by a further half of one percent against the ‘Greenback’ (USD).

Tonight’s US ISM Non-Manufacturing Composite and ADP Employment Change figures both appear favourable for the US economy. If the US economic data continues to be strong, the AUD to USD exchange rate could continue trending downwards, reaching even further lows later in the week.

Australian Dollar to Canadian Dollar (AUD/CAD) Exchange Rate Moves Up
The AUD to CAD exchange rate hit a 10 month low last week, however it has since recovered to push back up slightly.

The Bank of Canada will announce their Rate decision tonight, with the forecast being once again for the official cash rate to remain at 1%.

Later in the week, Canada’s Unemployment Rate will be release. The forecast is for an increase to the official Unemployment Rate from 6.5% to 6.6%. If this eventuates, the AUD to CAD exchange rate may continue to push back up towards parity.

Terry Finn