USD Trading Outlook
The AUD has slipped lower against all of the other major currencies after poor Chinese PMI
data yesterday showed that their manufacturing has stopped growing again. This is of course
seen as bad for Australian commodity exports. Precious metals gave up some of their recent
gains as well and this also added to downside pressure on the AUD. Yesterday’s Australian
CPI data has dampened speculation on an August rate cut to some degree, with futures
markets now pricing in roughly a 50% chance.
The FX market has opened the new week pretty close to last week’s levels but there have been some events over the weekend which could have longer term implications. The Federal Reserve is reviewing its decision from 2003 to allow banks to trade in physical commodities, and this could have an impact on commodity and equity markets. The Japanese government won a majority in the weekend elections, making it easier for them to push through their economic policies and this should be Yen negative over time.
Closer to home, two separate weekend press reports suggest that the Treasury will revise down economic forecasts and the RBA will cut rates in August.
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