AUD/USD Fundamental Forecast – June 23, 2016

The Australian Dollar is trading range bound against the U.S. Dollar early in the session due to uncertainties about Brexit and the lack of fresh economic data. The AUD/USD finished at .7465, up 0.0014 or +0.19%.

Testimony by Federal Reserve Chair Janet Yellen helped produce a two-sided trade on Tuesday after she held the line of “gradual increases” in U.S. rates. In her testimony before Congress, Yellen expressed general optimism about the U.S. economy and said gradual hikes in the federal funds rate were likely to be needed. However, she stressed the economic outlook was uncertain and that monetary policy was ‘by no means on a preset course”.

At the margin Yellen appeared to be a bit more cautious than before, but overall traders reacted as if their assessment of the Fed remained unchanged.

Yellen also highlighted the risks of Brexit, noting it would have “significant economic repercussions.”

The Forex pair spiked higher on Tuesday before closing lower as investors squared up positions ahead of the Brexit vote in Thursday, June 23. A vote to “remain” should be bullish for the Aussie because it is likely to increase demand for risky assets. A vote to “leave” should be bearish as investors would likely move money into the safety of the U.S. Dollar.

Recent opinion polls have mostly shown a shift towards keeping Britain in the European Union, but there are some signs that momentum has stalled for the “In’ camp and to some, the race still looks too close to call.

Some banks are not in the market today, or they are just in for commercial orders, ahead of the vote, so the AUD/USD is likely to remain range bound most of the session. Although the odds seem to favor “Remain”, it’s still 50/50, and no one wants to be caught on the wrong side of the news.

FxEmpire provides in-depth analysis for each asset we review. Fundamental analysis is provided in three components. We provide a detailed monthly analysis and forecast at the beginning of each month. Then we provide more up to the data analysis and information in our weekly reports, which covers the current week and are published by Sunday before the new week begins. Daily we share any new events, forecasts or analysis that affect the current day. To achieve a full accurate understanding it is important that you study all of our data and analysis as a whole.

Today’s economic releases:

Upcoming Economic Events that you should be monitoring:

Thursday, June 23, 2016

Government Bond Auctions

Jun 22 11:03 Sweden Holds bond auction

Jun 22 11:30 Germany Eur 1bn 2.5% Aug 2046 Bund

Jun 22 17:20 Italy Details of Zero-coupon/BTPei auction