AUD/USD Fundamental Analysis – week of July 25, 2016 -Forecast

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Published: Jul 23, 2016, 06:36 UTC

The AUD/USD traded at 0.7465 seeing declines against a strong US dollar and worries about rate decreases from the RBA. The pair is down almost 1.5% for

AUD/USD Fundamental Analysis – week of July 25, 2016 -Forecast

The AUD/USD traded at 0.7465 seeing declines against a strong US dollar and worries about rate decreases from the RBA. The pair is down almost 1.5% for the week. The strength in the US dollar (USD) and the expectations of a rate cut by the Reserve Bank of Australia are weighing on the Australian dollar exchange rates, which has slumped more than 2.7 per cent from the best FX levels of last Friday.

The decline in the Australian dollar (AUD) exchange rate intensified after the release of the minutes of The RBA’s July 5, board meeting, when it left rates unchanged at 1.75 percent.

The market was quick to react to the RBA release and the odds of a 25 basis point rate cut at the next meeting scheduled on Aug 2, has shot up to 58%, from 48%, a week ago.

“A combination of the need to avoid currency strength and confidence in a low CPI number is underpinning expectations the RBA will cut in August,” Adam Donaldson, head of debt research at Commonwealth Bank of Australia said. “Weak wage growth, global disinflation trends, and evidence of retail discounting are all contributing to the inflation view,” reports the Bloomberg.

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Major Economic Events for the week:

Date	Currency	Name	Volatility	Previous	Consensus
7/27/2016	AUD	Consumer Price Index (YoY)	3	1.3	1.1
7/27/2016	USD	Durable Goods Orders	3	-2.2	-1.1
7/27/2016	USD	Fed’s Monetary Policy Statement	3
7/27/2016	USD	Fed Interest Rate Decision	3	0.5
7/28/2016	JPY	BoJ Press Conference	3
7/29/2016	JPY	BoJ Interest Rate Decision	3	-0.1	-0.2
7/29/2016	JPY	BoJ Monetary Policy Statement	3
7/29/2016	EUR	Gross Domestic Product (YoY)	3	1.7	1.6
7/29/2016	EUR	Gross Domestic Product (QoQ)	3	0.6	0.3
7/29/2016	EUR	Consumer Price Index (YoY)	3	0.1
7/29/2016	EUR	Consumer Price Index – Core	3	0.9