AUD/USD Weekly Fundamental Analysis, October 20-24, 2014 Forecast

Weekly Analysis and Recommendation:

The AUD/USD remains weak as metals continue to weaken and the Chinese economy continues to stress investors. The Aussie ended at 0.8744. China’s growth performance continues to moderate in response to the ongoing consolidation in credit-intensive sectors, namely construction, with the softening in commodity demand and slumping prices taking a toll on resource suppliers around the world. Of the remaining BRIC nations, only India is exhibiting renewed output gains, a function of the renewed confidence in the country’s policymakers and increased industrial activity and exports.

Despite its relative economic stability, Australia finds itself buffeted by the winds of a global financial storm whipped up by dangerous imbalances. Those imbalances have got investors on edge. Fear is again on the rise.

“Up until fairly recently, we had been lamenting a lack of volatility. Careful what you wish for, because not only is Volatility back but its less attractive twin Fear joined the party last night,” is how Suncorp’s head of treasury research Darryl Conroy summed it up in a pithy Thursday morning note.

It is China’s cooling and global supply gluts which are responsible for recent price declines in two commodities – iron ore and coal – which account for about a third of Australia’s export revenues.

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. 

Historical: From 2011 to present

Highest: 1.1080 USD on Jul 27, 2011

Average: 1.0292 USD over this period

Lowest: 0.8890 USD October 2014

 

Economic Highlights of the coming week:

Upcoming Government Bond Auctions

Date Time Country 

Oct 21 10:30 Spain 3 & 9M T-bill auction

Oct 21 11:00 Norway Bond auction

Oct 21 11:00 UK Auctions 2.75% 2024 Gilt

Oct 22 11:30 Germany Eur 2.0bn Aug 2046 Bund auction

Oct 23 11:03 Sweden I/L bond auction

Oct 23 17:00 US Announces 2/5/7Y Note & 2Y FRN auctions on Oct 28/29/30 & 29

Oct 23 17:30 Italy Announces details of BTPei/CTZ auctions on Oct 28

Oct 23 19:00 US 30Y TIPS auction

Oct 24 17:30 Italy Announces details of BOT auction on Oct 29