Aussie Dollar Update

Wow. Boy does time fly. It’s the 11th June and the last entry on my forex trading blog was on the 3rd of March. Why? Call it a trading holiday - went to enjoy my time, see the world, experience the other side of life. Keep in mind, taking a breather is important. And now I’m back. Just when the Aussie dollar hits 17 year highs of over 84 cents per US dollar. The last time the Aussie was trading at this level was in August 1990. The dollar was launched to the stronger levels as a result of stronger than expected Gross Domestic Product (GDP) figures, rising 1.6 percent for the March quarter on quarter and 3.8 percent over the year to March 31 (Economists expected only 3.1 percent growth rate). And after three months of absence from trading the forex markets, its amazing to see that the Australian economy is still riding a strong metals cycle, with strong consumer demand, low unemployment, a level interest rate and strong business investment as a result of strong company profits.

It also sounds like interest rate talk is also helping the Aussie dollar up (just like before). There are rising expectations that interest rates would be hiked up later this year. Also, comments by US Federal Reserve chairman Ben Bernanke have also aided the Australian dollar as traders focused on the likelihood of a rate cut in the USA.

Last Wednesday, the Reserve Bank of Australia left official interest rates on hold at 6.25% following a monthly policy meeting on Tuesday. This didn’t really influence the Australian Dollar. “Recent data has been sufficiently strong to keep an RBA rate hike on the agenda for coming months,” said Tony Morriss, senior currency strategist at ANZ Bank. Mark this on your diaries: the RBA board is scheduled to meet up again next on July 3.

So what’s happening this week that may influence the Australian dollar?
June 12 Tues - NAB business Survey (May); US Retail sales (May)
June 13 Wed - Consumer confidence (June); US Beige Book
June 14 Thurs - Speech by Reserve Bank Governor “Economic Conditions & Prospects”; US Producer prices (May)
June 15 Fri - US Consumer prices (May) and US Industrial Production

Updated 14th June: at 10.30am (Sydney +10GMT) there is an inflation expectations announcement, at 12.55pm (Sydney +10GMT) RBA Governor Glenn Stevens will be giving a talk <– the market will be definitely watching what his speech would reveal. It’s also interesting to note that the AUD has broken through the 84 cent support last night and traded around the 0.8360’s.