Whether that happens or not should hinge on upcoming economic reports and rate decision but we’ve seen how AUD and NZD can defy fundamentals in favor of carry. For example it wasn’t until the U.S. dollar rebounded on Thursday did AUD/USD and NZD/USD finally peak. Weaker consumer price growth in Australia and cautious comments from Reserve Bank Governor Lowe failed to hurt Aussie. The same is true of a herd disease in New Zealand and the previous trend of softer data. AUD and NZD climbed to 2 year highs despite these negative developments. However the Reserve Bank could have tougher words for the market when they meet next week. We know that RBA Governor Lowe is worried about wage growth and the strong currency so there’s absolutely no reason to expect that they would say anything to suggest that a rate hike is on the table. Just this past week he said Australia doesn’t “need to move in lockstep with global peers” because did not ease as much. With that in mind, the labor market is very strong, business confidence and activity is up thanks in part to the increase in Chinese demand last month. If the RBA emphasizes the negative impact of the strong currency and low inflation, AUD/USD could extend its losses.
However in an environment of a falling USD and rising AUD, if they keep their statement virtually unchanged, the preservation of yield could be enough to lift the Australian dollar. Aside from the RBA rate decision, manufacturing and service sector PMI numbers are scheduled for release along with retail sales, the trade balance and Chinese PMIs.
The week ahead
Reserve Bank of Australia policy meeting
The RBA's latest interest rate decision
Australia Interest Rate Decision
Upcoming Release:
Aug 01, 2017 is due on Tuesday at 0430GMT (12:30AM ET).
Most economists expect the central bank to keep rates unchanged at the current record-low of 1.5% for the 11th straight meeting and maintain its neutral policy stance, as it balances the risk of fueling further borrowing in the country's red-hot property market against tepid inflation.
Besides the RBA, data on retail sales and the trade balance should also capture some attention.
However in an environment of a falling USD and rising AUD, if they keep their statement virtually unchanged, the preservation of yield could be enough to lift the Australian dollar. Aside from the RBA rate decision, manufacturing and service sector PMI numbers are scheduled for release along with retail sales, the trade balance and Chinese PMIs.
The week ahead
Reserve Bank of Australia policy meeting
The RBA's latest interest rate decision
Australia Interest Rate Decision
Upcoming Release:
Aug 01, 2017 is due on Tuesday at 0430GMT (12:30AM ET).
Most economists expect the central bank to keep rates unchanged at the current record-low of 1.5% for the 11th straight meeting and maintain its neutral policy stance, as it balances the risk of fueling further borrowing in the country's red-hot property market against tepid inflation.
Besides the RBA, data on retail sales and the trade balance should also capture some attention.
