AUD/USD Weekly Fundamental Analysis, May 25-29, 2015 – Forecast

Weekly Analysis and Recommendation:

The AUD/USD fell 71 points on Friday to close the week at 0.7824 as the US dollar gained steadily on Friday.  Manufacturing in China shrank for the third straight month in May as demand remained soft, raising the chances of more stimulus to prop up growth in the world’s No. 2 economy. HSBC’s preliminary manufacturing index, based on a monthly survey of purchasing managers, came in at 49.1. That’s slightly better than the 48.9 recorded in April but still in contractionary territory on the 100-point index. Numbers above 50 indicate expansion.

The Australian Dollar turned lower last week, breaking the win streak against its US counterpart established in early April. As we suspected, the move appeared to reflect repositioning ahead of the release of minutes from last month’s FOMC meeting and April’s CPI report.

The Australian dollar has slumped in the last trading session of the week, losing as much as US1c after core inflation data in the US topped expectations. Over the past 24 hours the currency has seen a high of 0.7933 and a low of 0.7810 its weakest mark for almost three weeks.

The falls were driven by the release of closely-watched inflation numbers in the US, with the April data showing the consumer price index climbing for the third straight month, up 0.1 per cent from the month prior. While this number was in line with forecasts, the market was a little surprised by the 0.3 per cent lift in core inflation, which strips out volatile food and energy prices.

The reading brought core inflation to 1.8 per cent year-on-year and closer to the US Federal Reserve’s 2 per cent target.

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 that you should be monitoring:

Government Bond Auctions

Date Time Country

May 25 09:03 Sweden Holds bond exchange auction

May 25 15:30 Italy Announces details of BTP/CCTeu on 28 May

May 26 09:03 Sweden Holds bond exchange auction

May 26 09:10 Italy Auctions CTZ/BTPei

May 26 17:00 US Auctions 2-year notes

May 27 09:15 Norway Holds bond auction

May 27 09:30 Germany Eur 2bn 2.5% Aug 2046 Bund

May 27 09:30 UK Auctions 0.125% 2058 I/L Gilt

May 27 16:00 US Auctions 2-year FRNs

May 27 17:00 US Auctions 5-year notes

May 28 09:10 Italy Auctions BTPs/CCTeus

May 28 09:10 Sweden Holds inflation-linked bond auction

May 28 17:00 US Auctions 7-year notes