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AUD/USD Fundamental Forecast – July 26, 2016

By:
Barry Norman

The AUD/USD added 6 points to 0.7471 as better than expected data over the past few weeks helped support the Aussie against the stronger US dollar. This

AUD/USD Fundamental Forecast – July 26, 2016

The AUD/USD added 6 points to 0.7471 as better than expected data over the past few weeks helped support the Aussie against the stronger US dollar. This week will be all about central back meeting which will have a big effect on commodity currencies and all of Asia with the BoJ set to start massive helicopter programs. Weak price growth in the June quarter is expected to provide the Reserve Bank with the excuse it needs to cut its benchmark rate to a fresh record low of 1.5 per cent next month — however, new research shows the fall in inflation around the world is predominantly driven by global forces that domestic monetary policy is powerless to address.

The June quarter inflation report, to be released on Wednesday, is expected to show the underlying rate of inflation was around 0.4 per cent which would put the annual rate at 1.4 per cent.

This would be slightly below the Reserve Bank’s forecast in its May monetary policy statement of 1.5 per cent. The minutes of the bank’s last meeting flagged that inflation was expected to remain low for an extended period given the subdued growth in labour costs and low cost pressures around the world.

On Monday global commodities were rallying giving a bump to the Aussie but keeping it in its range just below the 0.75 level.

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Upcoming Economic Events that you should be monitoring:

Tuesday, July 26, 2016

Country Name Volatility Previous
NZD Imports 2 4.22
NZD Exports 2 4.57
NZD Trade Balance (YoY) 2 -3.633
NZD Trade Balance (MoM) 2 358
GBP Inflation Report Hearings 3
USD S&P/Case-Shiller Home Price 2 5.4
USD Markit Services PMI 2 51.4
USD Markit PMI Composite 2 51.2
USD Consumer Confidence 2 98
USD New Home Sales Change (MoM) 2 -6
USD New Home Sales (MoM) 2 0.551

Government Bond Auctions

Date/Time Country Type

Jul 25 11:30 Germany Eur 1.5bn Jul 2017 Bubill

Jul 25 17:20 Italy Announces details of bond auction

Jul 26 11:10 Italy Holds zero-coupon/BTP€i auction

Jul 27 11:30 Germany Eur 1bn 2.5% Aug 2046 Bund

Jul 28 11:10 Italy Holds bond auction

 

 

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