Australian Dollar
Last week the Australian Dollar fluctuated in response to dovish commentary from the Reserve Bank of Australia (RBA) and news from the US. While the ‘Aussie’ was able to gain after the Fed took a dovish stance on domestic inflation, the currency fell back again before the close of the week as positive US data kept hopes of a third US rate hike in 2017 alive.
This week’s Reserve Bank of Australia (RBA) policy meeting will be one of the main causes of AUD exchange rate movement. If the central bank hints that borrowing costs are going to remain where they are for the foreseeable future, Australian Dollar losses are likely.
Pound Sterling
Although moderately positive UK retail sales figures from the Confederation of British Industry (CBI) gave the Pound a teeny lift at the tail end of last week, ongoing Brexit uncertainties and concerns about this week’s Bank of England (BoE) interest rate decision limited GBP exchange rate gains. The BoE is due to gather on Thursday and if the vote on whether or not to increase borrowing costs immediately isn’t as split as hoped we could see the Pound taking a tumble. UK PMI reports for the services, manufacturing and construction sectors will also be causing GBP shifts in the days ahead.
US Dollar
After sliding in the wake of the Federal Reserve’s interest rate decision, the US Dollar bounced back thanks to surprisingly strong US durable goods orders and consumer confidence figures. Although the US Q2 growth data came in slightly lower than forecast on the year at 2.6%, the result still marked a serious improvement on the Q1 figure of 1.2%. The run of reports gave the US Dollar a lift and if this week’s North American ecostats (like Friday’s non-farm payrolls numbers) follow suit, it might give the Fed more cause to consider increasing borrowing costs for a third time before the end of the year. If that proves to be the case and the US Dollar climbs on the news, we can expect AUD exchange rates to come under pressure.