AUD/USD Weekly Fundamental Analysis – May 16-20, 2016 -Forecast

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Published: May 14, 2016, 05:30 UTC

The AUD/USD closed out the week at 0.7273 steadily falling this week as traders listened to RBA comments. The Aussie declined 1.30%. According to BI, the

AUD/USD Weekly Fundamental Analysis – May 16-20, 2016 -Forecast

The AUD/USD closed out the week at 0.7273 steadily falling this week as traders listened to RBA comments. The Aussie declined 1.30%. According to BI, the sellers keep coming for the Aussie dollar.

After Deutsche Bank added its voice to the recent bearish outlooks for the dollar with a forecast of 60 cents by 2017 the sellers have been lining up. The Key to the Aussie’s troubles, and why forecasts are being downgraded, is the change in the RBA’s outlook for inflation and what that means for interest rates.

CBA chief economist Michael Blythe forecast RBA cash rates to fall to 1.25% this year. That came a short time after JP Morgan said rates will fall to 1% while Deutsche bank as part of their downgraded forecasts also said they expect rates in Australia to fall to 1% as well.

The greenback suffered a sharp sell-off in the first four months of 2016, hitting a 16-month low, as market expectations of at least two Fed rate hikes this year faded amid fears about a global economic slowdown and financial market turbulence.

With those concerns having subsided somewhat, some analysts say there are signs the tide could be turning for the dollar and that investors, who now see about a 60 percent chance of a Fed hike this year, may have pushed back their expectations too far.

In late trading, the dollar index rose 0.5 percent to 94.609, its largest one-day gain in more than a week. The index also got a boost after the University of Michigan’s consumer sentiment index rose to 95.8 this month, the highest level since June 2015, from April’s reading of 89. (Reuters)

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:


	Cur.	Event	Actual	Forecast	Previous
Tuesday, May 17, 2016
	GBP	CPI (YoY) (Apr)		0.5%	0.5%
	USD	Building Permits (Apr)		1.130M	1.076M
	USD	Core CPI (MoM) (Apr)		0.2%	0.1%
Wednesday, May 18, 2016
	JPY	GDP (QoQ) (Q1)		0.1%	-0.3%
	GBP	Average Earnings Index +Bonus (Mar)		1.7%	1.8%
	GBP	Claimant Count Change (Apr)		4.0K	6.7K
	EUR	CPI (YoY) (Apr)		-0.2%	-0.2%
	USD	Crude Oil Inventories			-3.410M
Thursday, May 19, 2016
	AUD	Employment Change (Apr)		12.5K	26.1K
	GBP	Retail Sales (MoM) (Apr)		0.5%	-1.3%
	USD	Philadelphia Fed Manufacturing Index		3.5	-1.6
Friday, May 20, 2016
	CAD	Core CPI (MoM) (Apr)		0.1%	0.7%
	CAD	Core Retail Sales (MoM) (Mar)		-0.5%	0.2%
	USD	Existing Home Sales (Apr)		5.40M	5.33M