The Australian Dollar to US Dollar (AUD/USD) Exchange Rate holds above 70 US Cents for the commencement of this week with investors awaiting the much anticipated September meeting of the US Federal Open Market Committee (FOMC) meeting. Prior to 1.8 Trillion being wiped off the global stock market it was the perception of most analysts and investors alike that September would be the month for the long awaited interest rate rise for the Fed.
The overall position of the AUD/USD exchange rate is still expected to decline over coming months, however this week may provide the ‘Aussie’ with some short term support. Overnight the AUD/USD exchange rate made it to a high of 71.52 US cents.
Local data for the week is extremely quiet with the only key data release due out today in the form of the Reserve Bank of Australia’s monetary policy minutes for the most recent rate decision where rates were kept on hold. Looking ahead for the week, investors will be focused solely on the US for impact on this currency pairing, with Retail Sales out tonight, Consumer Price Index (CPI) out Wednesday night and the focal point of the week Friday night with the FOMC statement and rate decision.
Elias Haddad, Senior Currency Strategist at CBA expects that the ‘USD should struggle to gain significant upside this week… on the belief the Fed will hold off raising rates until its December meeting’. If Elias Haddad’s reasoning is correct we could see the AUD/USD Exchange make some gains to close out the week, as the effect of this possible rate rise could already be built in the current exchange rate.
The Australian Dollar making small gains
The Australian Dollar has had some small gains against both the Pound Sterling and Euro at the commencement of this week. Tonight will provide some indication of the trend for both these currency pairings with high level data out for both during the offshore session tonight.
The UK will release their CPI figure, which is set to come in at 0.0% for year on year a slight revision from their previous annualised figure of 0.1%. Any improvement to this figure could however see the GBP return to fresh highs we have seen in recent weeks.
The AUD/GBP Exchange Rate is currently trading at 0.4625.
The Euro-zone is due to release a volume of indicators tonight including German ZEW economic sentiment, combined Euro Trade Balance and Employment Change. All of which will provide investors with key insight into the current health of the Euro-Zone in it’s entirety.
The AUD/EUR Exchange Rate is currently trading at 0.6304.