Fundamental Australian Dollar[1] Forecast: Bearish
Australian Dollar Talking Points:
- There’s an interest rate decision from the RBA coming up this week
- Official growth numbers are coming too
- Can either of them help the Aussie? Doubtful
Find out what retail foreign exchange traders make of the Australian Dollar’s prospects right now, in real time, at the DailyFX Sentiment Page[2]
The Australian Dollar faces a week of heavyweight economic news but none of it is very likely to improve the currency’s flagging fortunes.
Investors can look forward to an interest rate decision from the Reserve Bank of Australia on Tuesday. However there are no prizes at all for guessing that the record low, 1.50% Official Cash Rate is universally expected to stay put for yet another month. Indeed, local futures markets do not price in any sort of rise before early 2020 and, given the maturity of the global economic cycle, it may require a bit of imagination[3] to be certain that economic conditions are going to warrant tighter policy by then.
Still, it will be interesting as always to hear what RBA Governor Philip Lowe has to say after the decision. The RBA worried aloud last week that Australia’s high consumer debt might limit its policy response in the future, a comment which knocked AUD/USD[4] a bit on Friday. It is easy enough to see what the RBA means tough. Higher rates will mean still-greater debt-repayment burdens, reduced consumer spending and, very probably, a rise in defaults. Lower rates will stoke the borrowing orgy all the more. If Mr. Lowe alludes to this issue once again in the
