Fundamental Forecast for a Australian Dollar: Bearish
- The fundamentals aren’t looking good for a Aussie
- Whether around bold risk ardour or diseased commodity prices, bulls have their work cut out
- Consumer cost information competence offer some hope
Would we like to know some-more about financial-market trading? The DailyFX giveaway trade guide is for you.
Australian Dollar bulls didn’t have a good week final week. Can they wish for a improved one ahead?
Unlikely, on stream evidence.
International tensions over North Korea and Syria still simmer, damming a tellurian risk ardour that rather advantages a Aussie when in full flood. Then there’s Sunday’s initial turn Presidential opinion in France. These things overwhelmingly tend to go to a second runoff. That means a discernible outcome competence not come until May 7. But a clever display this week from a anti-EU Marine Le Pen would see a markets streamer for viewed breakwater resources in a large way.
Again, this competence bode ill for a Aussie, notwithstanding a comparatively clever opening of a home economy.
Commodity prices will also play a partial and there, too, seems small means for hope. Iron ore is Australia’s tip trade commodity. Its cost has depressed neatly given Feb as markets tatter about steel oversupply in China, and a long-term continuance of raw-material direct there, for all a stream vigor. Iron ore prices are down some-more than 30% given late February, and off 18% for 2017 to date. It’s substantially no fluke that a banking has been labyrinth reduce given Feb as well.
Then there’s a weekly mercantile calendar. This doesn’t demeanour like a vital column for a Australian Dollar either. Most of a ensign events will change a “USD” side of AUD/USD, substantially to a downside if they keep hopes of some-more seductiveness rate augmenting from a US Federal Reserve intact.
We will get an central demeanour during Australian consumer prices for a initial entertain of this year on Tuesday. They rose during a sluggish 1.5% in a final 3 months of 2016, yet a rate has been augmenting for 3 quarters. If it continues to do so afterwards a stream marketplace foresee of ‘no change’ to Australia’s record-low. 1.5% bottom rate this year competence be threatened. That could support a Aussie. However, it will substantially take a lot some-more than one information indicate to put that aged topic in critical jeopardy.
Reserve Bank of Australia Governor Phillip Lowe will also give a debate on Tuesday. We can have no thought of what he competence say, of course, yet a theory that he competence discuss a stronger Australian Dollar as an unattractive process headwind would be an prepared one. RBA officials have after all pronounced this before.
Given all of a above, a bearish Australian Dollar call it has to be for a week ahead, yet keep an eye on commodity prices, CPI and that Tuesday debate as probable threats to that prognosis.
There competence be justifiably wish for improved times forward though. Trade information out of Japan and expansion numbers from China both pronounce to a global-trade economy starting to unequivocally pierce again. And if any banking likes an torrent in tellurian trade, it’s a Aussie.
Meandering lower: AUD/USD one-day candle.
— Written by David Cottle, DailyFX Research
Contact and follow David on Twitter:@DavidCottleFX