Australian Dollar steady following release of FOMC minutes
|AUD - Australian Dollar
The Australian dollar remained range bound on Wednesday as it continues to take a breather from its decline at the start of August. Opening at 0.6780, we are literally sitting at the same mark this morning despite some positive movement in the offshore session to reach a weekly high of 0.6799.
We saw a slight rise in the local currency following the release of MI Leading index figures which measures nine economic indicators and looks to predict the direction of the economy. The index trended positively from -0.09% in June to 0.05% in July which is the first trending release higher since November last year. Tax cuts and an improving house market looks to have been the main catalyst for the higher reading.
The majority of price action occurred during the North American session as FOMC minutes were released. Minutes continued its dovish sentiment with a spike in the AUD/USD initially to test the 68 US cent handle before gains were erased.
Flash Manufacturing and Services PMI is scheduled for release this morning. From a technical perspective, the AUD/USD pair is currently trading at 0.6780. We continue to expect support to hold on moves approaching 0.6740 while now any upward push will likely meet resistance around 0.6840.
Key Movers
All eyes were on the release of the latest FOMC minutes overnight as equity markets rose again on the chance that investors are betting again on further stimulus from the United States Central Bank. The FOMC minutes showed the need for flexibility as several members would have preferred 50 basis points of cuts in July. Markets are currently hinging on the next move by the Federal Reserve bank as the CME Fedwatch tool currently shows all but a guaranteed cut at the next meeting in September. Markets currently pricing a 98% change of a 25bps move downwards to a range of 1.75-2.00%.
Tomorrow sees the first day of meetings at the annual Jackson Hole Symposium where leaders gather from around the world to discuss economy policy. Declining global growth is sure to be a key talking point over the coming days with central banks globally continuing to provide stimulus measures in the hopes of boosting countries around the world from slumping into recession.
Expected Ranges
AUD/USD: 0.6740 - 0.6840 ▲
GBP/AUD: 1.7700 - 1.8200 ▼
AUD/NZD: 1.0550 - 1.0650 ▲
AUD/EUR: 0.6080 - 0.6150 ▲
AUD/CAD: 0.8980 - 0.9050 ▼
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