Aussie lower as CPI print keeps RBA rate cut on the table

AUD / USD

Expected Range:0.7420– 0.7560

The Australian dollar edged lower through trade on Wednesday following a temperate quarterly CPI print and somewhat upbeat US Federal Reserve. The Aussie dollar enjoyed a brief upward push following the release of the quarterly Consumer Price Index report as the inflation gauge showed prices remained steady through the quarter while the trimmed mean marginally surpassed analyst expectations. Jumping to intraday highs at 0.7560 the AUD then turned sharply lower as profit taking took hold and investors’ attention turned to interest rate expectations. The CPI print while marginally better than expected may not be enough to dissuade the RBA from cutting interest rates when it next meets on August 2nd. The downward shift saw intraday lows at 0.7424 following the Federal Reserve’s hawkish assessment of US economic conditions before investors reassessed the likely hood of a September rate hike and held onto expectations the Fed will not pull the trigger on tighter monetary policy before December. The AUD now buys 0.7491 U.S cents as attentions turn to the BoJ for direction into the weekend.

NZD / USD

Expected Range: 0.6930 - 0.7130

The New Zealand dollar maintained a relatively tight trading band through trade on Wednesday holding onto recent gains above 0.70 and touching intraday highs at 0.7081. With little domestic data on hand attentions were squarely focused on the FOMC and Federal Reserve rate announcement. While the Fed proffered a somewhat hawkish assessment of economic conditions and waning global pressures it failed to deliver a definitive forward guidance. The rate statement failed to ad to last month FOMC offering and prompted a meek market response. Attentions now turn to the Bank of Japan and a highly anticipated monetary policy announcement. 

GBP / AUD

Expected Range: 1.7400 – 1.7800

The Great British Pound enjoyed a reasonable rally in the wake of the Federal Reserve and FOMC policy announcement pushing through 1.32 and touching intraday highs at 1.3235. Buoyed by a stronger than expected preliminary GDP print Sterling found support as the FOMC, despite offering a hawkish assessment of economic conditions, failed to increase expectations for a September rate adjustment. While hinting at a move before the year is out the Fed didn’t deliver the definitive guideline investors were seeking prompting a relatively meek market response and subtle USD weakness. Attentions now turn to the BoJ for direction into the weekly close.

USD, EUR, JPY

The Greenback edged marginally higher through trade on Wednesday as the Federal Reserve hinted at a possible September rate hike. FOMC policy makers opted to keep interest rates unchanged but proffered a somewhat upbeat assessment of US economic performance while downplaying potential shocks that could derail the recovery and future monetary policy plans. The world’s base currency jumped higher touching 1.1071 EURO and 106.51 Yen before attentions turned quickly back to the BoJ and speculation surrounding the outcome of its upcoming policy meeting. Prime Minister Shinzo Abe introduced new stimulus measures Wednesday, wherein the government will attempt to reflate the economy by injection 28 trillion Yen. The timing of the surprisingly large package announcement caught investors off guard and seemingly puts pressure on the Bank of Japan to introduce increased monetary stimulus measures. Nearly 80% of analysis anticipate the BoJ will add to its current stimulus package the market is poised for a JPY repositioning. Attentions through the end of the week lie squarely with the Japanese Central Bank as interest rates and monetary policy drive direction.