Currency Update: The Australian dollar continues to be buffeted by the reaction to US Federal Reserve Chairman Bernanke’s comments on Wednesday night. With the #AUD trading in almost a two cent range from .9100 to .9300 in the last 24 hours, the foreign exchange markets remain very jittery in regards to the likely direction of US Federal Reserve policy regarding monetary stimulus in the next few months. #Equity indices all rose last night in both Europe and the US as the recent accommodative stance of the central bank looks like it will continue although most analysts do see a reduction in the buying of securities from the present USD85bn level to a lower figure beginning most likely in September. We believe the quick rise in the AUD to .9300 was due to a number of stop losses being filled by some large market players who have been short the AUD over the last several weeks. The June labour force data released yesterday morning has increased the prospect of a further #RBA reduction in the 2.75% cash rate either next month or in September. With a rise in the unemployment rate from 5.5% to 5.7% which is the highest level since September, 2009, last month saw 10,400 new jobs added all of which on a net basis were part time jobs. With inflation figures for the last quarter to be released later this month, many believe there is scope to further lower the cash rate if the inflation is in the 0.5% region for the last quarter. The only concern is the RBA’s general attitude to leave any changes to the cash rate alone in the lead up to the federal election. As we know the date of the election is still in doubt. Today we will see some housing finance figures for May locally. We expect the FX market to remain volatile over the weekend as traders interpret Bernanke’s comments and the likely direction of US Federal Reserve policy. Chinese GDP figures for Q2 on Monday could influence the short term direction of the AUD early next week. Today’s Forecast Range: #USD 0.9125 - 0.9275.
Posted on: Fri, 12 Jul 2013 01:51:50 +0000
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