Federal Reserve rates decision this week
We have the United States Federal Reserve decision this Thursday. The last time, believe it or not, the Federal Reserve changed interest rates was way back in December 2008. It looks as though the “no change” policy will continue this week. RBC’s Capital Markets team is suggesting a rate hike later this year if strong US data continues.
According to Morgan Stanley the only way the AUD is going against the USD is down. They are predicting an AUD/USD exchange rate of 0.62 by the end of 2016. So a long steady decline which will be hastened when the US raises interest rates.
Today we have Consumer Price figures from the UK. With the GBPAUD exchange rate already trading and staying above the 2.00 mark, we will see whether the momentum will continue. Whatever else happens, these are the best exchange rates we have seen for 8 years.
European Central Bank Head, Mario Draghi, spoke last night and stated that Greece is a political decision.
Greece
Greece failed to pay USD $336 million to the IMF when it was due earlier this month and as yet has not come to a longer term agreement with its creditors. Patience may well be running out but we have to factor in the US point of view. Greece joined NATO in 1952 and is geographically based on NATO’s Southern flank. With the issues of Islamic State and Russian aggression, Greece’s place in Europe has wider implications than just financial.
President Obama has said “If both sides are showing a sufficient flexibility, then I think we can get this problem resolved,” Remembering that the Greek President recently made a trip to Russia, the US will do everything in its power to prevent Greece falling under the Russian sphere of influence by leaving the Euro embrace.
Australian Dollar (AUD)/ Euro (EUR)
Today the AUD/EUR exchange rate is 0.6876. German Chancellor Merkel said the Euro strength was making policy changes difficult. In other words, there several countries in the Euro zone who could do with a weaker Euro to help exports.
Australian Dollar (AUD)/ Great British Pound (GBP)
The Pound keeps improving and this time the GBP/AUD exchange rate has stayed above 2.00 after a couple of weeks where the Pound broke the 2.00 barrier only to retreat. Today the AUDGBP exchange rate is 0.4972.
Australian Dollar (AUD)/New Zealand Dollar(NZD)
New Zealand announces its Gross Domestic Product figures on Thursday. The market is expecting a decline in GDP which may impact the AUD/NZD exchange rate and further weaken the NZD. Today,, the AUD/NZD exchange rate is 1.1064 on interbank trading.