The Australian Dollar experienced a high degree of volatility last week resulting from China’s surprise devaluation of the Yuan. The Australian Dollar hit fresh 6 year lows against the Pound (GBP) and the US Dollar (USD). The market was less excited by the third devaluation of the Yuan and the Australian Dollar was able to gain some of the ground back with data indicating increased unemployment claims out of both the UK and US economies to close out the week.
It was a relatively quiet start to the week in terms of domestic data with Monday entirely absent of any Australian data being released. Today we can expect higher volatility to yesterday’s trading session with Australia’s major data release for the week due out at 11:30 AM from the Reserve Bank of Australia’s (RBA) with their Monetary Policy Meeting Minutes for August.
The Official Cash Rate (OCR) was kept on hold at 2.0% this month, however close attention will be paid to the latest minutes out, as this month included a hint into possible change to the stance of the RBA. The key difference was that Governor Glenn Stevens dropped the reference to the necessity for ‘further depreciation’ replacing this statement with ‘the Australian Dollar is adjusting to significant decline in key commodity prices’.
Whilst many analysts still believe that there is still a distinct possibility for another rate cut for Australia, the timing and certainty of this is now less likely. This subtle change to the speech provides early insight into possible changes to the RBA’s stance on monetary policy for Australia and investors will be waiting the minutes for further clues out of the RBA.
Tonight will provide the release of Consumer Price Index out of the UK; previous results have been flat at 0.0% with the expectation for CPI to remain again at 0.0% for this month’s annualised figure.
Following on from this the next high tiered data release for the UK will be Retail sales out Thursday night; the expectation is for an improvement on the previous result of -0.2% to an increased consumer spending result of 0.2%.
The AUD/GBP Exchange Rate is currently trading at 0.4729 at 8:00 AM AEST today.
The Australian Dollar to US Dollar (AUD/USD) Exchange Rate set to move on US data releases
The Australian Dollar to US Dollar (AUD/USD) Exchange Rate remains volatile after hitting fresh lows last week with a number of high tiered data releases out of the US for the remainder of the week.
US data releases will commence tonight with Building permits and housing starts, giving an indication of future construction activity, considered a leading indicator of economic health.
Wednesday will provide the release of CPI for the US and the much anticipated Federal Open Market Committee (FOMC) Minutes, investors will be hoping for insight into the timing of changes to the official cash rate for the US, with the expectation still for the possibility of this to occur as early as September.
Unemployment claims and the Philly Fed Manufacturing Index both set for release on Thursday to close out the week packed full of US data that is likely to cause this currency pairing a significant amount of volatility to an already vulnerable trading level.
The AUD/USD Exchange Rate is currently trading at 0.7372 at 8:00 AM AEST today.