AUD/USD Fundamental Analysis – November 4, 2015 – Forecast

Analysis and Recommendation:

The AUD/USD is trading at 0.7200 climbing 53 points after the RBA rate decision.  The Reserve Bank of Australia decided to keep its policy rate unchanged at 2% despite falling inflation rates.

While re-iterating that the monetary policy needs to be accommodating, the central bank said that “the Australian dollar is adjusting to the significant declines in key commodity prices” and “business surveys suggest a gradual improvement in conditions over the past year.” The RBA continues to rely on the U.S. Federal Reserve to do the dirty work and keep the Aussie low, saying “the Federal Reserve is expected to start increasing its policy rate over the period ahead.” The RBA started its easing cycle because it thought the Aussie was too strong, eroding Australia’s terms of trade.

The Australian dollar was sold off sharply before the RBA announcement but has rebounded since, up 0.3% today. Tuesday’s decision was widely expected, despite the surprisingly soft third-quarter inflation reading last week and credit tightening by Australia’s four main lenders, who have been making investor mortgages more expensive.

Mr Stevens acknowledged recent mortgage rate increases by the four main lenders, but said overall conditions were still quite “accommodative”.

“Credit growth has increased a little over recent months, with growth in lending to investors in the housing market easing slightly while that for owner-occupiers appears to be picking up,” he said.

“Dwelling prices continue to rise in Melbourne and Sydney, though the pace of growth has moderated of late.”

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 up to the data analysis and information in our weekly reports.

Today’s economic releases:

 

Upcoming Economic Events that you should be monitoring:

Wednesday, November 4, 2015

Government Bond Auctions

Date Time Country

Nov 03 10:10 Austria Holds RAGB bond sale

Nov 04 15:30 Sweden Announces details of Bond on 11 Nov

Nov 04 N/A Holland Announces details of Bond on 10 Nov

Nov 05 09:30 Spain Auctions Bonos

Nov 05 09:50 France Auctions OATs

Nov 05 10:03 Sweden Holds I/L bond auction

Nov 09 12:00 Norway Details bond auction on 11 Nov

Nov 09 15:30 Italy Announces details of BTPs/CCTeu on 12 Nov

Nov 09 N/A US Holds 3-year note auction

Nov 10 10:30 UK 0.125% 2058 I/L Gilt auction

Nov 10 N/A Holland Eur 2.0-3.0bn 0% Apr 2018 DSL

Nov 10 N/A US Holds 10-year note auction

Nov 11 10:03 Sweden Holds bond auction

Nov 11 11:15 Norway Holds bond auction

Nov 11 10:30 Germany Eur 3bn 0.25% Oct 2020 Bobl

Nov 12 10:10 Italy Auctions BTPs/CCTeus

Nov 12 10:30 UK 4.25% 2039 Gilt auction

Nov 12 N/A US Holds 30-year bond auction