Australian Dollar (AUD) Awaits Domestic Data for Next Movement

The Australian Dollar (AUD) is likely to remain volatile for most of this week as a result of domestic data releases. After a relatively quiet week of domestic economic releases last week, there is an abundance of local economic indicators being released this week.

Today will see the release of lower-tier data in the form of Building Approvals and Securities Inflation within Australia. Chinese Manufacturing and Non-Manufacturing Purchasers Managers Index (PMI) scheduled to be announced today will also be influential to the Australian Dollar (AUD).

Tomorrow the Reserve Bank of Australia (RBA) Rate Decision will be announced at 14:30 AEST. After the RBA cut interest rates by a further 25 basis points last month to bring the Official Cash Rate (OCR) to a record low 2.00%, the governing body will almost certainly keep rates on hold tomorrow. On this occasion, the accompanying statement will be more influential on the Australian Dollar (AUD).

Further volatility concerning the ‘Aussie’ (AUD) will occur Wednesday with the announcement of the Australian Gross Domestic Product (GDP) figures. The quarterly and annualised GDP figures in Australia are currently sitting at 0.5% and 2.5% respectively. Chinese Composite PMI and Services PMI will follow on from the Australian GDP, adding to the volatility this week.

Australian Trade Balance and Retail Sales figures will be at the focal point on Thursday, with the forecast being that Retail Sales will remain at a stagnant monthly growth figure of 0.3%, with the trade balance falling from -1.32B to a whopping -2.11B.

Recent monetary policy action, combined with poor economic performance in key facets of the Australian economy has placed significant downward pressure on the value of the AUD over the past few months. The ‘Aussie’ (AUD) will need some impressive local data this week in order to put a halt to the downward trend, even if it is only temporarily.

Australian Dollar to Euro Exchange Rate Set to Move

The AUD/EUR exchange rate oscillated around the 0.70 mark during the Australian trading session before falling later that evening to trade at sub 0.70 levels. With numerous high-tier data releases out of both the Australian economy and the Euro-Zone this week, the AUD/EUR exchange rate is certain to remain volatile.

The annualised German Consumer Price Index (CPI) is scheduled for release tonight, with the Euro-Zone inflation figures announced tomorrow evening. The Euro will be looking to advance against the ‘Aussie’ (AUD) should higher than expected CPI come to fruition.

In addition to RBA Rate Decision and GDP figures out this week, the European Central Bank (ECB) Rate Decision is also scheduled for this week. Once again, the governing body is expected to keep rates on hold at 0.05%, with close attention being paid to the wording used by Mario Draghi, Head of the ECB.

The uncertainty surrounding the whether or not Greece will default on their debt obligation will also play havoc with the AUD/EUR exchange rate this week. Currently the AUD/EUR exchange rate is trading at 0.6962 at 0800 AEST.

Terry Finn