AUD/USD Fundamental Forecast – June 2016

The AUD/USD is trading near the bottom of its 2016 range as the US dollar continued to rally and worries from China remain in the forefront. Traders are worried that the RBA might lower rates again this month. The Aussie is trading at 0.7241 moving into a heavy trading season dominated by central bank meetings.

Stronger Australian Building Approvals and Private Sector Credit figures helped to shore up the appeal of the Australian Dollar exchange rate at the end of the month boosting confidence in the domestic economy.

Worries over the outlook of the Reserve Bank of New Zealand (RBNZ) have been mounting ahead of next week’s policy meeting, allowing the Australian Dollar to New Zealand Dollar (AUD/NZD) exchange rate to make fresh gains. The near-future may see the US hold the deciding say over the value of the AUD and NZD.

Australia’s economy grew at its fastest pace in 3½ years in the first quarter, outpacing other advanced economies even as it added more uncertainty to the outlook for interest rates. Gross domestic product grew 1.1% in the first quarter from the fourth quarter and 3.1% from a year earlier, a government report showed Wednesday. Economists surveyed by The Wall Street Journal had expected 0.9% growth from the previous quarter and a 3.0% year-over-year rise.

With a month to go before a federal election, Treasurer Scott Morrison embraced the news, saying the data confirm that a transition in the economy away from mining was evident.

Australia is also experiencing strong residential housing construction, led by a boom in apartments, while a lower Australian dollar is lifting services exports, leading to strong growth in industries like tourism, health care and education. Still, falling mining investment is likely to be a drag on growth for the next year at least, economists say.

Some economists say that the stellar growth is based mostly on exports, leaving the country exposed to global shocks, while income growth has been constrained as commodities prices remain weak. (WSJ)

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.

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