AUD/USD Monthly Fundamental Forecast February 2015

Outlook and Recommendation

The AUD/USD is trading at a multiyear low as the US dollar surged and commodity currencies tumbled. The Aussie is trading at 0.7766 near the bottom of its monthly trading range. The Reserve Bank of Australia is scheduled to meet the first week of the month, although Glenn Stevens is not expected to change rates, his outlook and statement could send the currency on a volatile course. Over the past month the RBA has talked down the Aussie saying it should be trading at 75 cents.

Official Chinese data showed the world’s second biggest economy grew at a 7.3 percent annual pace in the December quarter, its slowest pace of growth since 1990. That weighed on the New Zealand and Australian dollars, with both nations counting China as their biggest trading partner. Lower forecast global growth this year by the International Monetary Fund, with an expanding US economy one of the few advanced economies receiving an upgrade, added to pessimism.

China’s GDP report “is the lowest they’ve had in 24 years, and there are continuing fears global growth is sliding down,” said Stuart Ive, senior dealer foreign exchange at OMF in Wellington. “In terms of the kiwi, our performance against the US dollar will be a slow downward slide rather than a great fall.”

While the US Federal Reserve is still expected to begin raising interest rates later this year, the contrast with loosening monetary policies elsewhere in the world is becoming even more stark. “That monetary divergence continues to dominate foreign exchange markets.

The growing strength of the US dollar should keep the Aussie near lows but near the 78 level later this month.

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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