The Australian Dollar (AUD) succumbed to the continued downward pressure during yesterday’s Australian trading session, falling between a quarter to half a percent against the majors and minors, with the exception being the New Zealand (NZD) in which it advanced by approximately half a percent. Overnight the ‘Aussie’’ (AUD) showed its’ state of volatility by recovering all the ground lost and actually managed to make gains of close to half a percent against the currency board.
It is a rather quiet week of economic releases out of the Australian economy this week, with only lower tier data being released today in the form Construction Work Done and the change to Australian wages in the form of the Wage Cost Index. Chinese Manufacturing Purchasing Managers Index (PMI) is likely to be the more influential to the value of the AUD today than the local data.
Chinese PMI is expected to result in a contraction figure of 49.5, emphasising the gradual slowdown of the Chinese economy. A printed figure higher than the forecast is likely to give rise to the AUD whilst a weaker than expected will likely cause the ‘Aussie’ (AUD) to dwindle.
The next major release out of the Australian economy will occur next Tuesday when the Reserve Bank of Australia (RBA) announces their rate decision for the month of March. Growing expectation is that the Official cash Rate (OCR) will be kept on hold at 2.25%, following on from this month’s rate cut by 25 basis points. There are still a number of economists who are taking the standpoint that rates will be cut further and as such, keeping the rates on hold may cause the Australian Dollar to strengthen considerably. An additional rate cut will almost certainly cause another significant fall to the AUD.
Australian Dollar to US Dollar (AUD/USD) Exchange Rate is Beginning to Form a Range
The AUD/USD exchange rate has remained between 0.76344 and 0.78606 for the entire month of February 2015 and is currently trading towards to the end of this range.
After experiencing major downward movement, the AUD/USD exchange rate is appearing now to show some degree of stability which could continue in the short-term due to economic forces. The ‘Aussie’ (AUD) increased in value against the ‘Greenback’ (USD) overnight following on from US Consumer Confidence data for February being weaker than expected.
Tomorrow evening economists anticipate a mixed result of economic data out of the US. Durable Goods orders are expected to show a growth figure of 1.6% from the previous month’s figure of -3.3% however, inflation in the form of the Consumer Price Index (CPI) is forecast to come in at -0.1%. If such a result comes to fruition, investors may take the view that the US Federal Reserve will delay their expected interest rate hike and allow the AUD/USD exchange rate to break out the range to the upside.
In a heavily dominated week of US focused economic releases, the final major release likely to impact on the way the AUD/USD exchange rate trends in the US Gross Domestic Product (GDP) figure. The forecast is that the annualised US GDP figure will decrease from 2.6% to 2.0%. Any deviation from the expected figure is likely to impact the AUD/USD exchange rate leading into the weekend.