Australian dollar coin
A one Australian dollar coin is seen in this picture illustration taken in Sydney, Australia, July 29, 2015. Reuters/David Gray

Bell FX Currency Outlook: The AUD has recovered slightly, trading back near USD0.7180, after falling to a low of USD0.7145 yesterday.

Australia: After starting the day relatively unchanged above USD0.7200, the AUD quickly lost ground following comments from RBA Governor Stevens at a briefing in Sydney yesterday afternoon. While Governor Stevens remarks were fairly measured he did note that inflation was running below the banks target of 2-3% and that probably is a little too low at the moment. The market took that to mean that there will be another rate cut, to a record low of 1.5% in the next few months. The AUD was sold off on the back of the comments into the offshore session. It has recovered slightly however a move to USD0.7100 is now more likely. Ahead today we have skilled vacancies and Construction Work Done for Q1.

Majors: The USD was stronger against most of the majors overnight, supported by better than expected US new home sales data and the expectation of another increase in interest rates. US and European equities had a good night with gains in financial and technology shares leading the charge. Oil prices climbed higher, supported by expectations that output disruptions will help alleviate the oversupply in the market. Gold was off, down almost 2%, while iron ore is practically unchanged at $51.4. In Europe tonight Germany releases its IFO Survey for May and Consumer Confidence for June. In the US they have Advance Goods Trade Balance for April, House Price Purchase Index for Q1 and Markit US Services/Composite PMI for May. Also of note tonight the Bank of Canada makes its rate decision with majority expecting no change.

Economic Calendar 25 MAY

  • AU Construction Work Done
  • US House Price Purchase Index QoQ
  • CA Bank of Canada Rate Decision
  • NZ Trade Balance

Bell Fx

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