Australian Dollar
The Australian Dollar was able to spend Tuesday’s European session standing firm against the Pound, US Dollar and Euro. The ‘Aussie’ fell last week after a Reserve Bank of Australia (RBA) official asserted that the central bank had no plans to increase interest rates just because other central banks were doing so. However, the currency is currently benefiting from increased demand for higher risk assets in the face of falling US interest rate hike expectations.
If the Federal Reserve indicates that it might not deliver the promised third interest rate hike in 2017 when it meets on Wednesday, the Australian Dollar could broadly strengthen.
Pound Sterling
A lack of influential UK reports meant the Pound was unable to hold the gains recorded on Monday as the week continued. The Confederation of British Industry’s CBI business optimism index improved from 1 to 5 in July but the trends total orders and trends selling price figures both declined. GBP exchange rates are liable to trade in a fairly narrow range ahead of the publication of the UK’s latest growth figures.
US Dollar
The US Dollar remained under pressure after the International Monetary Fund (IMF) cut its growth forecasts for the US for both 2017 and 2018. If the Fed implies that a softer domestic growth outlook will prevent stimulus being tightened further before the close of the year, USD exchange rates could plummet during Wednesday’s US session.
Euro
Positive German business confidence figures lent the Euro support and helped the European currency gain on both the Pound and US Dollar. Any news which ups the odds of the European Central Bank (ECB) discussing the tapering of stimulus in the Autumn will be Euro-supportive.