The Australian Dollar to US Dollar (AUD/USD) Exchange Rate has experienced a volatile start to the year, last week was no exception where we saw the currency pairing move from a new 6 year low of 0.6827 Wednesday with little economic data out of Australia and global worries with oil dropping to as low as $28.00 per barrel.
The ‘Aussie’ was able to bounce back Thursday and climb back above the psychological barrier of 70 US cents with poor US data in the form of Consumer Price Index (CPI) and Core CPI which showed a decline of 0.1% in the costs of goods for the US economy for November and Oil making some recovery. The AUD to USD Exchange Rate was able to close out the week with a weekly high of 70.45 US Friday.
The currency pairing was able to hold above 70 US cents for the commencement of Monday’s local trading. The only local data release for the day was NAB Business Confidence with a result still indicating perceived improvement by the businesses surveyed. The latest result of 3 was slightly less positive than the previous month at 5, however any result above 0 is considered to be improving.
NAB Group Chief Economist Alan Oster commented in the accompany notes that ‘While recent big declines in oil and equity markets highlight potential risks to the global outlook, relatively positive business conditions appear to have, so far, acted to reassure business sentiment”.
He also gave us confidence in the outlook by stating that “this outcome suggests there are no real signs (beyond normal monthly volatility) that there is a fundamental weakening in the non-mining recovery.
Australia Day provided a lack of economic data for the Australian economy and we saw the markets maintain a relatively stable range the AUD/USD Exchange rate trading between 0.6914 – 0.7021 US Cents.
Data indictors heat up today with the first consumer price index release of the Australian economy at 10:30AM AEST, globally we have seen CPI declining in all major economies with dropping oil pricing a major contributor. The CPI result is forecast to move from 0.5% last quarter to 0.3%.
Overnight tonight we have the first Federal Open Committee Meeting for the year, were we hope to have some indication of the stance of the Fed for the year ahead. The focus remain on central banks Thursday morning with the Reserve Bank of New Zealand’s (RBNZ) Official Cash Rate decision (OCR) still forecast to remain on hold at 2.50% however there is some speculation that the RBNZ will need to cut in coming months and any hints on this may move the market in anticipation of this.