AUD/USD Weekly Fundamental Analysis – February 1-5, 2016 -Forecast

Weekly Analysis and Recommendation:

The AUD/USD was able to sustain the 0.70 level after climbing above 0.71 as the Aussie rallied on stronger commodity prices. The Aussie is holding at 0.7088 ahead of the RBA meeting this week. The Aussie dollar broke through 0.71 reaching a two-week high, underpinned by a weaker US dollar.

Disappointing US durable goods orders overnight supported the view of a US economic slowdown on softer global demand and weighed heavily on the US dollar.

“The durables report was the initial catalyst – it was horrendous,” said Mazen Issa, senior foreign-exchange strategist at Toronto-Dominion Bank about the greenback. “The weak data did take the stuffing out of the dollar, and it looks vulnerable to the downside.”

A possible fall in US GDP combined with global equity market volatility and slumping oil prices that have plagued investors so far in 2016 would greatly reduce the likelihood that the Federal Reserve would raise interest rates aggressively this year.

That possibility of the Fed holding rates steady pushed markets into higher-yielding currencies like the Australian, Canadian and New Zealand dollars, which all gained notably.

The Aussie, as a major commodity currency, has also fared well as copper and oil have both made strong recoveries.  Of course there was the higher-than-expected CPI figures for the 4th quarter – an impressive feat given the commodity sell-off and weak currency.

This also lessens substantially the chance the RBA will lower rates below 2.0% at their policy meeting on the 2nd February too, adding further strength to the dollar’s outlook

FxEmpire provides in-depth analysis for each currency and commodity 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 recent analysis and information in our weekly reports and we provide daily updates and outlooks.

Major Economic Events for the week:

 

Upcoming Government Bond Auctions

Date Time Country 

Feb 02 n/a UK Details of Gilt auctions on Feb 09 & 11

Feb 03 11:03 Sweden Holds bond auction

Feb 03 11:30 Germany EUR 5bn Apr 2021 Bobl

Feb 03 n/a Netherlands Details of DSL auction on Feb 09

Feb 03 n/a US Details of 3 & 10-yr notes on Feb 09/10

Feb 03 n/a US Details of 30-year bond auction on Feb 11

Feb 04 11:50 France Holds bond auction

Feb 04 17:20 Sweden Details of I/L bond auction on Feb 11