AUD/USD Weekly Fundamental Analysis, August 17 – August 21, 2015 Forecast

Weekly Analysis and Recommendation:

The AUD/USD had a volatile week, reaching a new low for the year, but closing only slightly lower for the week after the People’s Bank of China devalued its currency three times. The Forex pair would’ve fell further if Chinese authorities had not steeped in to halt the slide in the Yuan. 

The recovery by the Aussie was also fueled by speculation that the Fed would once again delay an interest rate hike that 55 percent of traders believed would take place as soon as September. 

The Aussie could be underpinned by Tuesday’s release of the Reserve Bank of Australia’s Monetary Policy Minutes. At its last meeting, the central bank refrained from a rate hike and hinted that prices may have reached fair value. This was interpreted to mean that there would be no further rate cuts in 2015. Traders will look at the minutes to verify the guidance suggested in the monetary policy statement. 

Wednesday’s U.S. consumer inflation report and the Fed minutes are also likely to be market moving events. Although traders now believe the Fed will refrain from a rate hike in September because of the turmoil caused by China’s devaluation, the decision is likely to be reaffirmed by a weaker-than-expected CPI number. Last week Federal Reserve vice chairman Stanley Fischer also said that a rate hike is not a done deal because of low inflation concerns. 

As long as China backs away from further devaluations, the elimination of a September rate hike combined with technically oversold conditions are likely to be supportive for the AUD/USD this week. However, the price action is expected to remain volatile because of the uncertainty surrounding China and the strength of its economy. 

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. 

Important Reports to Watch this Week: 

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