AUD/USD Weekly Fundamental Analysis, November 23 – November 27, 2015 Forecast

Weekly Analysis and Recommendation: 

The AUD/USD spiked to a two-week high last week as traders reacted to the FOMC minutes released on November 18. The minutes reiterated the expectation that interest rates would rise at its December meeting, however, U.S. Dollar investors expressed concerns about the timing of future rate hikes.

The Fed is likely to pull the trigger on an interest rate hike at its December 16-17 meeting, however, after the initial rate hike, the next rate hikes are likely to be more gradual than traders had been anticipating. The price action in the AUD/USD suggests that investors are readjusting their positions to reflect the staggered future interest rate hikes.

Once the readjustments are complete, the AUD/USD is likely to sell-off once again as traders react to the plunge in commodity prices that are showing no signs of bottoming. Although the Reserve Bank seems content with the economy and has no plans to raise interest rates in December, conditions could shift rather quickly if the country’s revenues weaken enough because of the lower commodity prices. Any renewed talk of an RBA rate hike in December will be bearish for the AUD/USD.

The AUD/USD finished the week at .7235, up 0.0112, or 1.57%.

This week, the key events include a speech by RBA Governor Glen Stevens, U.S. Preliminary GDP and Durable Goods. Stevens could move the markets if he raises concerns about falling commodity prices and its impact on inflation. This could stoke the flames of a near-term rate cut. With the December rate hike seemingly in the bag, all the Fed wants to see is consistency in the GDP and durable goods reports.

Volume and volatility may be below average this week because of the U.S. holiday on Thursday. Nonetheless, some traders may try to take advantage of these conditions so be aware of the possibility of a choppy, two-sided trade.

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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