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Australian Dollar in the Headlines This Week; Latest RBA Forecasts Due

With a number of Australian data releases, RBA statements and forecasts on the economic calendar, the Australian dollar is likely to be in the headlines this week, for good or bad.

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RBA Australian dollar AUD currency news and forecasts

Against the US dollar and euro, the Australian dollar ended last week worth 3 percent more than its start-of-year values at respective exchange rates of US$0.725 and €0.633. Against the British pound and New Zealand dollar, the Aussie is little changed this year, at rates of £0.555 and NZ$1.051.

Though the aforementioned exchange rates look comforting when compared with major lows recorded during January 3rd’s flash crash, all considered they reflect a currency that has disappointed in recent years. Against the euro, for example, the Australian dollar is worth 14 percent less than its best rate since the start of 2017.

To the dismay of those in Australia, a number of FX researchers cut Australian dollar forecasts in January, indicating even more depreciation ahead.

Of course, those forecasters could be wrong, and who knows, kick-starting the Aussie’s comeback might be events on this week’s economic calendar, of which there are many.

Taking centre stage early in the week will be the RBA’s statement on monetary policy, scheduled for Tuesday at 2:30pm local time (GMT +11). The accompanying decision on Australia’s cash rate is largely a sideshow given a near-zero probability that this will be changed from its current record low level of 1.5 percent.

From the RBA’s statement, investors will be hoping to extract information pertaining to future cash rate decisions—it is these, which more than anything else, drive the Australian dollar’s medium and long-term valuations.

Though the RBA continues to uphold a mostly optimistic bias, markets are becoming increasingly skeptical and have in recent months moved to price in a small probability of the bank cutting rates before the year is out.

Should Tuesday fail to deliver much in the way of market moving information, FX traders will get a second go on Friday when the RBA releases its latest inflation and growth forecasts, scheduled for 11:30am local time. Any significant revisions to these forecasts could spark currency volatility. For 2019, the RBA has previously predicted growth of 3.25 percent and inflation of 2.25 percent.

Also on the calendar this week is data covering Australian building approvals (Monday), retail sales and the trade balance (Tuesday), and business confidence (Thursday).

 

Further Reading

 

Coronavirus panic drives US dollar strength

Currency rates were extremely volatile last week as the coronavirus situation worsened day by day with various countries implementing ever-tougher measures to stop the spread of the disease.

Last update: 23 Mar, 2020

Coronavirus spread fears linger – USD strong – AUD at 11 year lows

This week the US Dollar was touching three-year highs when valued against a basket of major currencies. The greenback’s traditional role as one of the safe-haven currencies is helped by a domestic economy that is largely immune to the threats of the coronavirus.

Last update: 22 Feb, 2020

Coronavirus unnerves currency markets

The strong start to the year for “risk-on” currencies is already a distant memory.

Posted: 3 Feb, 2020

  

Posted to: News

 
 
Please note that the opinions of our authors are their own and do not reflect the opinion of Best Exchange Rates and should not be taken as a reference to buy or sell any financial product.
 

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