Australian Dollar Facing Conflicting Domestic, External Catalysts


Australian Dollar Facing Conflicting Domestic, External Catalysts

Fundamental Forecast for Australian Dollar: Neutral

  • Australian Dollar Looking to Upbeat CPI Data to Rekindle Up Move
  • Firming US News-Flow May Hurt AUD/USD on Narrowing Policy Gap
  • Help Time Turning Points for the Australian Dollar with DailyFX SSI

The Australian Dollar’s month-long winning streak ran into resistance last week as the build-up in RBA policy expectations stumbled. A Credit Suisse measure of investors’ priced-in policy bets over the coming 12 months declined for the first time in three weeks. A potentially conflicting set of fundamental event risk in the week ahead promises to keep driving policy outlook speculation and keep volatility elevated.

On the domestic news-flow front, the spotlight will be on first-quarter CPI data. Expectations suggest the headline year-on-year inflation rate will rise to 3.2 percent from 2.7 percent recorded in the three months through December 2013, marking the highest level in over two years.

Data from Citigroup shows Australian economic news-flow has increasingly outperformed relative to consensus forecasts since mid-February, suggesting economists are underestimating Australia’s place in the business cycle. That opens the door for an upside surprise. Such a result may go a long way toward rebuilding support on from the RBA policy outlook and driving the Aussie higher.

Externally, a busy docket of US activity data will help inform bets on the continuity of the Fed’s effort to “taper” QE asset purchases. Home Sales, Durable Goods Orders and Consumer Confidence figures are in the spotlight. Economic data outcomes from the world’s largest economy showed a notable improvement relative to expectations over the past two weeks. If that trend continues, ebbing doubt about the continued withdrawal of Fed stimulus. That may highlight the immediacy of the Fed’s move to narrow the policy gap compared with the RBA’s apparent preference for inaction in the near term, weighing on AUD/USD. 

Recommended Content


Recommended Content

Editors’ Picks

EUR/USD holds above 1.0650 amid renewed selling pressure in US Dollar

EUR/USD holds above 1.0650 amid renewed selling pressure in US Dollar

The EUR/USD pair edges higher to 1.0672 during the early Thursday. The recovery of that major pair is bolstered by renewed selling pressure in the US Dollar and a risk-friendly environment.

EUR/USD News

GBP/USD remains capped below 1.2470, eyes on US data

GBP/USD remains capped below 1.2470, eyes on US data

The GBP/USD pair trades on a softer note around 1.2450 on Thursday. The softer UK inflation data prompted the expectation that the Bank of England will start lowering interest rates in the coming months, which weighs on the Pound Sterling against the Greenback. 

GBP/USD News

Gold rebounds on market caution, aims to reach $2,400

Gold rebounds on market caution, aims to reach $2,400

Gold price recovers its recent losses, trading around $2,370 per troy ounce during the Asian session on Thursday. The safe-haven yellow metal gains ground as traders exercise caution amidst heightened geopolitical tensions in the Middle East.

Gold News

Manta Network price braces for volatility as $44 million worth of MANTA is due to flood markets

Manta Network price braces for volatility as $44 million worth of MANTA is due to flood markets

Manta Network price was not spared from the broader market crash instigated by a weakness in the Bitcoin market. While analysts call a bottoming out in the BTC price, the Web3 modular ecosystem token could suffer further impact.

Read more

Investors hunkering down

Investors hunkering down

Amidst a relentless cautionary deluge of commentary from global financial leaders gathered at the International Monetary Fund and World Bank Spring meetings in Washington, investors appear to be taking a hiatus after witnessing significant market movements in recent weeks.

Read more

Majors

Cryptocurrencies

Signatures