The Australian Dollar has commenced the week with a relatively stable session of trading for Monday, making small gains against majors during the local session of trading.
The Australia Dollar to UK Pound Sterling (AUD/GBP) made it to a high of 0.5102. The Australian Dollar to US Dollar (AUD/USD) made it to a high of 78.45 US Cents and the Australian Dollar to Euro (AUD/EUR) to a high of 0.6896.
With no high tiered data released Monday during trading the ‘Aussie’ was unable to hold onto any gains against all the majors during the offshore session, the AUD/GBP exchange rate giving back almost a 1% to 0.5043 and the AUD/USD exchange rate giving back close to half a percent.
Today stability is expected to continue during the local session with no data releases scheduled for Australia.
Any possible volatility will result from market speculation of offshore releases for the week ahead with much of the week focused on scheduled Central Bank Governor’s speeches.
US Federal Reserve Chairwoman Janet Yellen appears on Tuesday and Wednesday at Capitol Hill to testify for the Semi-annual Monetary policy report, this testimony comes in two parts including a time for the committee to ask questions. Given that this is unscripted it has the potential to cause quite significant market volatility based on responses by Chairwoman Yellen.
Over in the UK, Governor Mark Carney of the Bank of England (BoE) will speak on Wednesday night in London at the OneBank Research Agenda launch investors looking for any subtle clues regarding monetary policy stance for the BoE and future cash rate changes.
Inflation results set for release and global inflation still a concern
Tonight the in the UK the Bank of England (BoE) will meet for the Inflation report hearings, where the members will discuss inflation and their target expectation along with the overall outlook of the economy. This will be of key significance given the low inflation results we have seen out of the UK since the beginning of this year.
This week is also inflation focused for the US with Consumer Price Index (CPI) due for release on Thursday evening during the offshore session. The last result out of the US was a sharp decline for the month of December, posting a release of a reduction of 0.4%.
The US, much like most of the other major economies including the UK, attributed this primarily to falling oil prices, which is causing inflationary issues globally. The result is forecast to decline further for the month of January down by 0.6%.
Crude oil pricing fell on Monday with the news that US Domestic crude inventories are at their highest in 80 years. There was some recovery Monday afternoon however Daniel Ang, an investment analyst with Phillip Futures in Singapore explained that this was ‘more of a speculative increase’, that due to oversupply this is unlikely to hold.
With Oil pricing still close to record lows inflation is still a concern globally, the release of the CPI figure out US will be of key importance to investors, after the release of the Federal Open Market Committee (FOMC) Meeting Minutes last week indicated that the Fed are still concerned about the slack in the labour market and global deflation. Further decline in the CPI figure will give investors fuel to the speculation that interest rate hikes may now be delayed from the anticipated increase for midyear.