AUD/USD Weekly Fundamental October 7 -11, 2013 Forecast

Weekly Analysis and Recommendation:

The AUD/USD is trading at 0.9454 climbing all week against the weak US dollar. This week the RBA has proven itself highly sensitive to Australian dollar (AUD) strength. Accordingly, any currency appreciation is likely to be capped by potential policy action. Much like the CAD, traders can expect the AUD to weaken into year-end but then stabilize in 2014.  The Australian dollar rose on Friday and was on track to end the week sharply higher amid cautious trading as the US budget standoff dragged on. It has risen 1.2 per cent so far this week and no less than five cents since lows plumbed in August.

It was largely undeterred by the ongoing budget drama in the United States which has forced a partial government shutdown since Tuesday.

 

Despite the US dollar languishing near 8-month lows and keeping risk appetite at bay, the Aussie managed to keep gains, partly as investors’ unwound Aussie short-positions should the US crisis worsens. Fears are growing that the current impasse would merge with a much more complex fight looming later this month over raising the US federal debt limit. Failure to do so could lead to a historic debt default and trigger massive US dollar volatility. Supporting the Aussie was firm prices of iron ore above $US130 per ton. The mineral is Australia’s single biggest earner.

Also helping was a sharp revision in interest rate expectations with markets pushing back easing to next year. Two major Australian banks now forecast the Reserve Bank of Australia (RBA) to cut interest rates in 2014, from late this year. The RBA left rates unchanged at a record low of 2.5 per cent on Tuesday, but surprised some watchers by not giving an explicit indication there was room to ease again.

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 of September 30-October 4 actual v. forecast for Yen, the Aussie, the Kiwi and USD

 

Economic Highlights of the coming week that affect the AUD, JPY, NZD and USD

Government Bond Auction

Date Time Country 

Oct 07 15:30 Italy

Oct 08 00:30 Japan

Oct 08 08:10 Holland

Oct 08 09:10 Norway

Oct 08 09:30 UK

Oct 08 14:30 UK

Oct 08 15:30 Italy

Oct 08 17:00 US

Oct 09 09:30 Germany

Oct 09 09:30 Swiss

Oct 09 14:30 Sweden

Oct 09 17:00 US

Oct 10 00:30 Japan

Oct 10 09:10 Italy

Oct 10 09:10 Sweden

Oct 10 17:00 US

Oct 11 09:10 Italy

Oct 11 10:00 Belgium