Since the Federal Reserve decided to hike their interest rates on Thursday morning it’s been one way traffic for the Australian Dollar (AUD), steadily failing against the US dollar (USD), currently trading at 0.7125 at AEST 8am.
The significant move we have seen in the ‘Aussie’ can be attributed to US dollar strength rather than the Australian Dollar weakness. We can see evidence of this in a basket of other currencies including the New Zealand Dollar (NZD), the Euro (EUR) and the Pound Sterling (GBP) which have all fallen against the strengthening USD.
NAB Senior economist David de Garis said ‘markets have turned cautious as the optimism from the US Federal Reserve’s interest rate rise proved to be temporary’.
‘Energy and Material sector stocks – commodities have again been the center of selling with a further push lower in the price of oil, base metals, and gold, helped along by still evident support for the US dollar’ he said.
The high tier data releases for today are at 10am AEST starting with ANZ business confidence out of New Zealand, followed by Japan’s Monetary Policy Statement and Bank of Japan (BoJ) Press Conference later in the day. Later during the offshore session we will see the release of Core Consumer Price Index (CPI) month on month out of Canada.
Next week leading into Christmas the big movers and shakers will be Tuesday evening with final Gross Domestic Product (GDP) quarter on quarter from the US, Wednesday New Zealand releases it Trade Balance figures and out of Canada Core Retail sales month on month and GDP. In the final days before Christmas the markets will turn to the US with labour data in the form of Unemployment claims on Christmas Eve.