The Australian Dollar (AUD) managed to hold onto gains that it made against the majors and minors earlier in the week during the Australian trading session yesterday. Overnight the ‘Aussie’ (AUD) continued its’ rally against the ‘Pound’ (GBP) by pushing up a further three quarters of a percent to hit an 8 week high.
Yesterday the Chinese Manufacturing Purchasing Managers Index (PMI) failed to provide an additional lift for the Australian Dollar (AUD), coming in at the contraction figure of 49.2 when the expansion figure of 50.5 was expected. Although this slightly weakened the ‘Aussie’ (AUD) after the release, it managed to recover overnight against the USD and advanced further against the EUR and GBP.
Today the major announcement locally will occur at 1030 AEST when the Reserve Bank of Australia (RBA) communicates their bi-yearly Financial Stability Review. Although the focus of this report will likely be the housing market, economists and investors will pay close attention to the wording of the review for any mention about the current value of the Australian Dollar (AUD) and any mention of the prospect of further interest rate cuts which is likely to sway the AUD.
Australian Dollar to US Dollar (AUD/USD) Exchange Rate Edging Closer to the 0.80 Mark
The AUD/USD exchange rate has been extremely volatile over the past, experiencing swings back and forth in the region of close to 2%. Currently the ‘Aussie’ (AUD) appears to have the upper hand in gaining momentum as it edges towards a two month high against the ‘Greenback’ (USD), currently trading at 0.7875 at 0800 AEST.
Overnight US Consumer Price Index (CPI) data was released. The forecast was that the annualised printed figure would be a deflation reading of -0.1%. Although the result of 0.0% was slightly more impressive than the expectation, it was not enough to give rise to the US Dollar, meaning that the AUD/USD exchange rate was able to hold onto the gains it had made prior to the weekend and earlier in the week.
Tonight the US will report on Durable Goods Orders for the month February which is forecast to reduce from the previous month’s result of 2.8% to 0.2%. Further US economic releases will take place later in the week with US Unemployment Claims announced tomorrow evening and Gross Domestic Product (GDP) figures out Friday evening.
The AUD/USD exchange rate has been moving recently in response to the interest rate movement expectations from the Federal Reserve in the US and the Reserve Bank of Australia (RBA) locally. Both economies appear to be delaying a movement, with the Fed set to increase interest rates and the RBA likely to cut rates further. Continued volatility in the AUD/USD exchange rate is expected when Janet Yellen, Head of the Federal Reserve, makes a speech to round out this week’s trading.
Australian Dollar to Pound Sterling (AUD/GBP) Exchange Rate Trading Around 2 Month High
The AUD/GBP exchange rate is currently trading around the highest level it has been in approximately 8 weeks after making big gains due to Copper pricing increasing significantly earlier in the week and inflation falling in the UK.
Last night the UK released inflation data in the form of the Consumer Price Index (CPI). The annualised CPI was previously sitting at the low level of 0.3% and the overnight result indicated that CPI dropped further than the expectation of 0.1% to 0.0%. This caused the AUD/GBP exchange rate to continue its upward trend by gaining a further three quarters of a percent.
Tomorrow night the UK will release their Retail Sales for the month of February. The consensus is that the annualised Retail Sales will decrease from 4.8% to 4.2% which could allow the AUD/GBP exchange rate continue to rally even further.