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AUD/USD Fundamental Analysis – for the week of August 9, 2016

By:
Barry Norman
Updated: Aug 6, 2016, 06:02 UTC

The AUD/USD rallied late in the week to trade at 0.7617 but gains were limited by the climbing US dollar. New stimulus from the BoE held support commodity

AUD/USD Fundamental Analysis – for the week of August 9, 2016

The AUD/USD rallied late in the week to trade at 0.7617 but gains were limited by the climbing US dollar. New stimulus from the BoE held support commodity based currencies. The pair showed a weekly gain of 0.26% and is a strong buy in the week head with several events on the calendar including the RBNZ rate decision following the RBA rate drop last week.  None of the four major banks will pass on the full interest rate cut to its customers following the Reserve Bank of Australia’s decision to drop rates to a record low of 1.5 per cent.

The RBA board members made the decision to lower the cash rate by 25 basis points on Tuesday in a bid to spark inflations and reduce the chance of the Australian dollar soaring in value.

The last time the RBA cut the interest rate was back in May when it also slashed it by 25 basis points to 1.75 per cent.

The decision came in the wake of recent figures showing annual inflation at a 17-year low, and at just one per cent, it is way below the two to three percent target band.  It was the fourth official rate cut since the coalition came to power in September 2013.

Shadow treasurer Chris Bowen said it was a further sign the economy is struggling and makes a mockery of the Turnbull government’s slogan of ‘jobs and growth’.

‘The treasurer … now needs to have a proper plan, not a slogan, not a three-word election gimmick, but a proper plan to engender more confidence, more investment in our economy,’ Mr Bowen said.

The RBA has slashed rates by 300 basis points since November 2011 to support the economy as it transitions toward non-resources growth after an unprecedented mining investment boom.

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This Week’s Economic Events That You Should Be Monitoring:

Date Country Name Volatility Previous Consensus
8/9/2016 GBP NIESR GDP Estimate (3M) 3 0.6
8/10/2016 AUD RBA’s Governor Stevens 3
8/10/2016 NZD RBNZ Interest Rate Decision 3 2.25 2
8/10/2016 NZD Monetary Policy Statement 3
8/10/2016 NZD RBNZ Press Conference 3
8/12/2016 EUR Gross Domestic Product M 3 0.3 0.3
8/12/2016 EUR Gross Domestic Product Y 3 1.6 1.6
8/12/2016 USD Retail Sales (MoM) 3 0.6 0.4

Government Bond Auctions

Date Time       Country           Auction

Aug 09 11:15 Austria Optional bond auction

Aug 09 19:00 US 3-yr Note auction

Aug 10 11:00 Germany EUR 5B 0% 2026 Bund

Aug 10 19:00 US 10-yr Note auction

Aug 11 11:30 UK 0.125% I/L 2036

Aug 11 19:00 US 30-yr Bond auction

 

 

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