AUSTRALIAN DOLLAR FORECAST: NEUTRAL/BULLISH
- The Australian Greenback has steadied going into the lengthy weekend
- A hawkish Fed has a number of fee hikes coming whereas RBA sidelined
- US Greenback seems to steering AUD/USD for now
The Australian Greenback was caught in crosshairs of exterior elements by the week simply handed. Between the US Greenback gyrations and commodity market volatility, the Aussie went alongside for the journey with none home influences of observe.
The elemental backdrop for AUD stays stable, though it isn’t displaying up in all of knowledge in the meanwhile.
The unemployment fee got here out final Thursday and printed at 14-year lows for the second month in a row in for March. Sturdy.
Nonetheless, the commerce information from the week earlier than confirmed that exports had been flat, whereas imports rose, reflecting a home economic system spending healthily.
The spot costs of commodities that Australia export have been rising steadily within the spot market. The majority commodity contracts take time to roll off and be re-negotiated. This can unfold within the coming quarters and better export values seem possible.
CPI is one other piece of knowledge but to replicate the present situations. Australia is within the midst of a federal election marketing campaign and each of the most important political events try to impress their financial administration credentials.
Astoundingly, each side of the aisle have repeatedly refused to fund the Australian Bureau of Statistics (ABS) to supply the RBA with month-to-month inflation information. As a substitute, they get quarterly reads on what’s going on within the economic system.
Of the G-20 nations, Australia and New Zealand are the one 2 nations that don’t present month-to-month CPI figures. A minimum of New Zealand present a month-to-month meals value index.
If both get together actually understands how the economic system works, it appears apparent that the ABS ought to be funded to supply month-to-month CPI. Particularly on condition that the Federal Authorities mandates the RBA to an inflation focusing on regime.
None the much less, Australian first quarter CPI might be launched April 27th and the following RBA assembly is Might 3rd.
A excessive CPI may immediate the RBA into motion, which might be supportive of the Aussie. Till then, it’s on the whim of exterior influences and additional weak spot can’t be dominated out.
The Ukraine struggle continues to create uncertainty in markets and the US Greenback is having fun with secure haven standing. On the similar time, commodities are going larger. This a conundrum for AUD route.
The Federal Reserve has stepped up their rhetoric on fee hikes over the past fortnight. This has seen the USD strengthen, pushing down AUD/USD. This is perhaps the important thing driver over the following week. It’s arduous to think about the Fed being any extra hawkish.
If markets assume they’ve priced in all of the hikes over the near-term horizon to the tip of this yr, then it could undermine USD to sure extent.
Chart created in TradingView
— Written by Daniel McCarthy, Strategist for DailyFX.com
To contact Daniel, use the feedback part under or @DanMcCathyFX on Twitter