Australian Dollar Outlook - 18 September 2014
Bell FX Currency Outlook: The AUD had been losing ground during the night, then after the FOMC statement it fell from 0.9020 to 0.8950 levels.
Australia: The AUD has fallen to its lowest point since early March after the committee released its statement from its two day meeting. It is more about the USD strengthening broadly, hitting 4 year highs against a basket of currencies including the EUR, GBP & JPY following the statement and Federal Reserve Chair Yellen's subsequent press conference. Asset purchases will be reduced by USD10bn to USD15bn and the FOMC expects to end asset purchases at its next meeting. The tone of Yellen's testimony and the FOMC statement re-iterated that a highly accommodative stance for monetary policy is still warranted whilst acknowledging that the economy is expanding moderately. In Australia today, the RBA quarterly Bulletin is released at 11:30AEST.
Majors: Since the FOMC announcement the EUR has lost significant ground, from 1.2960 to 1.2870, while the USD/JPY has risen above 108.00 for the first time since September 2009. The FOMC statement was little changed from July and maintained existing forward guidance that interest rates will stay low for a "considerable time after the asset purchase program ends." However, the median for the fed funds rate forecast at end-2015 increased to 1.35% (compared with 1.125% in June) with interest rates now expected to reach 2.875% at the end of 2016 (compared with 2.5% previously). The target for the unemployment rate at the end of 2014 was lower at 5.9-6.0%. But otherwise the FOMC press release contained very few changes at all, with the only other notable one being the growth assessment, where growth is now 'expanding at a moderate pace'.
Economic Calendar
- 18 SEPT AU RBA Bulletin
- NZ GDP SA QoQ
- SC Scottish Independence Referendum
- US Initial Jobless Claims
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