AUD/USD Fundamental Forecast – May 25, 2016

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Published: May 24, 2016, 03:52 GMT+00:00

The AUD/USD dipped 3 points to trade at 0.7221 as the greenback continued to climb. “Persistent weakness in iron ore prices has kept the Australian dollar

AUD/USD Fundamental Forecast – May 25, 2016

The AUD/USD dipped 3 points to trade at 0.7221 as the greenback continued to climb. “Persistent weakness in iron ore prices has kept the Australian dollar under pressure but 00.72 has held well,” BK Asset Management managing director of FX Strategy Kathy Lien said. Iron ore dropped 6.7 per cent overnight to a three-month low.

Reserve Bank governor Glenn Stevens will give a speech later on Tuesday, and Ms Lien said his outlook for the economy could determine whether this key level is broken or if US72c becomes a near term bottom for the Aussie. (The Australian).

Traders are pricing in a 32 percent chance the Federal Open Market Committee will raise the federal funds rate when it meets next month, having priced in a 5 percent chance two weeks ago. Recent speeches by central bankers have supported that line, and St Louis Fed President James Bullard and San Francisco Fed boss John Williams held to that view in speeches on Monday.

According to News.au “Most asset classes ranged sideways for little net change, with little fresh news to drive markets,” Westpac strategist Imre Speizer said.

“The US dollar and US interest rates were stable, commodities saw mixed but minor changes, but equities were firm.” With the local data calendar empty on Monday, Mr Speizer tipped the Aussie to retain its downward momentum, saying it’s vulnerable to hit 71.75 US cents.

“Multi-month, we expect the US dollar to eventually find its feet and help drag the Australian dollar lower,” he said.

“In addition, further Reserve Bank of Australia easing will be a negative.”

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.

Upcoming Economic Events that you should be monitoring:

Wednesday, May 25, 2016

Cur.	Event	Actual	Forecast	Previous
USD	API Weekly Crude Oil Stock			-1.140M
NZD	Trade Balance (YoY) (Apr)		-3,940M	-3,380M
NZD	Trade Balance (MoM) (Apr)		60M	117M
AUD	Construction Work Done (QoQ) (Q1)		-1.5%	-3.6%
EUR	EU Finance Ministers Meeting
USD	Goods Trade Balance (Apr)		-60.10B	-56.90B
USD	FOMC Member Harker Speaks
USD	Services PMI (May)		53.1	52.8
CAD	Interest Rate Decision		0.50%	0.50%
USD	Crude Oil Inventories			1.310M
USD	FOMC Member Kashkari Speaks
USD	FOMC Member Kaplan Speaks