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AUD/USD falls as RBA eases inflation policy statement

Fri, May 06 2016, 05:55 GMT SzrnFX

The AUD/USD near fresh nine-week lows of 0.7382, having finally breached 0.74 handle. The Australian dollar remains relentlessly offered versus its American dollar after downward revisions to the Australian inflation and wage growth outlook cast a mantle of doubt over the OZ nation’s economic growth prospects and bolstered calls for further RBA rate cuts in a bid to spur the ailing economy.

“The Reserve Bank of Australia’s new forecast that underlying inflation will remain below the 2-3% target range until the middle of 2018 supports our long-held view that interest rates will be cut again to 1.5% before long,” Capital Economics said in a note to clients.

Overnight, the dollar rose against a basket of currencies for a third day on Thursday as traders closed out profitable bets against the greenback before Friday’s U.S. payrolls report which may confirm the view the Federal Reserve will not raise interest rates soon.

More so, renewed sell-off in the oil prices further exacerbated the pain in the resource-linked Aussie and hence, added to the prevalent risk-off trades in the markets. While wide-spread cautiousness ahead of the US payrolls data, also collaborates to the downbeat sentiment around the AUD/USD pair.

AUD/USD gain stronger-than expected Australian economic data

The AUD/USD drifted higher on Thursday in Asia with trade and retail sales among data sets ahead. The bulls continue to cheer a slew of stronger-than expected Australian economic data as the European session gets underway, although thin trades are expected as most major European markets are closed on account of a public holiday.

Earlier on the day, Australia’s March retail sales came in at 0.4% m/m vs. 0.3% expected and 0% last, while the trade balance printed -2,163M vs. -2,900M expected and -3,410M last. While the newly-built home sales surged 8.9% m/m in March, rising at the fastest pace in six years.

Overnight, the dollar remained broadly higher against the other major currencies on Wednesday, after the release of mostly positive U.S. data boosted optimism over the strength of the economy.

A solid recovery in the oil prices also supports the upbeat momentum in the resource-linked Aussie. Looking ahead, the US jobs data and Fed speak will be closely eyed ahead of the crucial US NFP report due tomorrow.

AUD/USD plunges as RBA’s surprise rate cut

The bulls were caught off-guard and surrendered entire gains after the bears fought back control on RBA’s rate cut announcement, driving the AUD/USD pair sharply lower from four-day highs reached at 0.7720 levels.

Overnight, the dollar remained at eight-month lows against the other major currencies on Monday, after data showed that U.S. manufacturing activity expanded at a slower than expected rate in April adding to concerns over the strength of the economy.

The RBA cut the key cash rates by 25 bps to a record low of 1.75% at its policy meeting this Tuesday, in a bid to combat lower prices pressures and spur economic growth. The central bank sounded more downbeat on the economic prospects in light of deteriorating inflation outlook. While remained concerned over the higher AUD level, citing rising AUD could complicate economic adjustment.

The decision came a day after the Federal Reserve kept interest rates on hold last week and indicated that any future interest rate hikes would be data dependent.

Next on tap for the major remains the Fed speak due later today ahead of the US jobs data due tomorrow.

AUD/USD under pressure

The AUD/USD remains heavily offered in early Europe as the European traders hit their desks and react negatively to the poor Australian CPI figures released earlier today.

Australia’s Q1 headline CPI figures came in at -0.2% q/q versus +0.2% expected and +0.4% previous. While the trimmed mean CPI stood at +0.2% versus +0.5% expected and against +0.6% last.

Overnight, the dollar remained broadly lower against the other major currencies on Tuesday, as the release of disappointing U.S. economic reports dampened demand for the greenback and as investors remained cautious ahead of the Federal Reserve’s policy statement on Wednesday.

The recent sell-off in the iron-ore prices also exacerbated the pain in the resource-linked Aussie. Further, comments from Goldman Sachs, citing that the Wall Street banker expects RBA rate cut next week, also weighed down on the AUD/USD pair.

Focus FOMC…
Markets continue weigh RBA easing chances, while the main highlight for today remains the FOMC meeting outcome due to be announced in the NY session.

AUD/USD under pressure

The AUD/USD weakened against the other major currencies in the Asian session on Tuesday following the negative cues from Wall Street and as oil prices eased overnight. Investors preferred to stay on the sidelines ahead of central bank policy decisions due for the week.

Crude oil futures turned lower Monday on a private estimate that showed that supplies in Cushing, Oklahoma storage facilities continued to rise. This is the main delivery hub in the US

Overnight, the dollar remained broadly lower against the other major currencies on Monday, after the release of weak U.S. housing sector data and as sentiment on the greenback remained fragile ahead of the Federal Reserve’s policy meeting this week.

Investors also remain cautious ahead of the US Federal Reserve’s two-day policy meeting starting later today.

The Federal Reserve is not expected to lift rates at this meeting, but the markets will be looking for clues on whether a June rate hike is on the table.

The Bank of Japan also meets this week and expectations that it would help banks lend by offering a negative rate on some loans are rising.

In the New York session, US durable goods orders for March, S&P/Case-Shiller US house price index for February, the Conference Board’s US consumer confidence index for April and the Richmond Fed’s regional manufacturing index for April are due. At 8:55 am ET, Bank of Canada Governor Stephen Poloz is expected to speak at the Canada-US Securities Summit in New York.

AUD/USD under pressure as oil tumbles

The Aussie ended a four-day rally and dropped sharply this session as sentiment soured across the financial markets as oil turned back in the negative territory after Kuwait labor strike ended.

Overnight, the dollar remained broadly lower against the other major currencies on Tuesday, as the release of disappointing U.S. housing sector data continued to weigh on demand for the greenback.

The recent speech by RBA Governor Stevens also continues to weigh on the investors’ mind and hence, reduces the demand for AUD against its American rival. Further, markets look to book profits on their AUD kings after the recent strength, as focus now shifts towards the US existing home sales and US crude inventories data due later today for further incentives on the Aussie.

Meanwhile, uncertainty over future U.S. rate hikes persisted after New York Federal Reserve President William Dudley warned on Monday that the U.S. central bank is likely to stick to a cautious approach on tightening monetary policy.

AUD/USD gain after RBA minutes

The Aussie remains strongly bid as the RBA minutes displayed an optimistic view on the economy, while talked down slightly on the AUD level and left more scope for easing in the upcoming months.

Overnight, the dollar remained broadly lower against the other major currencies in quiet trade on Monday, as markets were jittery after major oil producers failed to reach an agreement on an output freeze and as Friday’s downbeat U.S. data continued to weigh.

The AUD/USD pair keeps gains and consolidates near yearly highs as broad based US dollar weakness also helps the bullish run in the pair. Next on tap for the major remains the US housing data and RBA Stevens speech scheduled later in the day, which may provide next direction on the prices.

The reports underlined the view that the Federal Reserve is likely to stick to a cautious approach on future interest rates increases.

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