Fundamental Australian Dollar[1] Forecast: Bearish
- AUD/USD[2] is at lows not seen for well over two years
- While interest rate differentials hold sway, it’s hard to see this changing
- The coming week won’t break this trend
Find out what retail foreign exchange traders make of the Australian Dollar’s prospects right now, in real time, at the DailyFX Sentiment Page[3]
The Australian Dollar market will receive plenty of economic data in the coming week, but none of it is likely to shake the currency out of its deepening downtrend against the US Dollar[4].
Snapshots of consumer and business confidence will top the domestic data bill on Tuesday and Wednesday, respectively. Meanwhile a look at China’s private service-sector performance and overall trade both stand a good chance of influencing AUD/USD at least in the aftermath of their release thanks to Australia’s strong export links to China.
However, that pair now hovers near lows investors won’t have seen since February, 2016. It is also right in the middle of the long, daily-chart downtrend that has endured for all of this year.
AUD/USD Remains In Thrall To Rising US Rates
The underlying reason for this weakness remains of course the widening interest-rate gulf between Australia and the US. The Federal Reserve has[5] raised interest rates eight times since it began the process in 2015. The Reserve Bank of Australia for its part continues to hold its own key Official Cash Rate at a record-low of 1.50%. This has been unchanged since August 2016 and, according to futures markets, is still expected to stay put for the rest of
