After somewhat of a lacklustre start to 2015, the AUD managed to make some gains against the majors mid week after the Trade balance figure came in above expectations.
The Trade Balance figure indicated that Australia’s trade deficit widened to $925M when the expectation by economists’ was that it would increase to $1.6B. The AUD has managed to hold its ground making significant gains against most of the majors.
Overnight the Bank of England (BoE) rate decision held no surprises with interest rates remaining on hold at 0.5%. The bank also keeping the size of its bond-buying stimulus program unchanged at 375bn. Interest rates have been on hold for almost six years since March 2009.
The underlining tone of Governor Mark Carney in the accompanying statements was quite bearish, citing low inflation, caused in part by falling oil prices, strains in the Euro-Zone and ongoing concerns about economic recovery, in the decision to keep interest rates on hold. The announcement assisted with a boost to the AUD/GBP exchange rate. This continued the ‘Aussie’s’ (AUD) rally against the ‘Pound’ (GBP), which commenced at the start of 2015.
The major local announcement due out on the domestic front is concerned with Australian Retail Sales. The forecast is a contraction from the previous month’s growth figure of 0.4% to 0.3%.
Following on from the domestic release of Australian Retail Sales the Australian Dollar is likely to influenced by Chinese data in the in the form of CPI and PPI. It is forecast that the CPI will increase from 1.4% to 1.5% after coming in slightly below expectation last month. A positive result here may see further strengthening of the AUD.
Tonight will be a big night of economic releases out of the US economy. It is predicted that the unemployment figure will drop from 5.8% to 5.7%. If this does occur it will most likely reignite the USD rally driving the ‘Aussie’ to a new 5 and a half year low.