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AUD weakens amidst Federal Reserve Announcement

AUD - Australian Dollar

The AUD saw a slight uptick during yesterday’s trading session upon the release of CPI data which came back higher than the forecasted figure of 0.5%, at 0.6%. Unfortunately, it fell sharply in the early hours of the day on the back of the FOMC announcement as it weakened against the USD, to open at 0.6841 this morning.

As expected the Federal Reserve reduced its target range for the funds rate by 25bps, to 2.00% - 2.25% and notified it would also stop its balance sheet reduction. The market reacted positively to the FOMC statement, with the USD rising across the board.

The Australian Bureau of Statistics will release their figures for Retail Sales just before midday tomorrow. Showing the change in the total value of sales at the retail level, these monthly figures are the primary gauge of consumer spending and accounts for the majority of coverall economic activity.

Key Movers

The US-China trade talks ended with no deal in sight. Treasury Secretay Mnuchin and Trump negotiator Lighthizer left China yesterday, reporting that there has been no breakthrough on either side yet, but agreeing to meet again in Washington in September. Economists predict that a long trade war will cause China more harm than good as they are going through an economic slowdown. Beijing has responded by increasing their spending on infrastructure, which could worsen China’s debt.

In other macroeconomic news, the Bank of England is scheduled to release a flurry of statements this evening relating to the Official Bank Rate. While expectations are that interest rates will hold with a majority vote, we may see major movement still when the announcement is official.

The USD can also see major movements with the release of their Non-Farm Employment Change and Unemployment Rate figures tomorrow night, further pushing the USD higher against the other major currencies.

Expected Ranges

AUD/CAD: 0.8980 - 0.9060 ▼

AUD/EUR: 0.6935 - 0.7010 ▼

AUD/GBP: 1.7575 - 1.7825 ▲

AUD/NZD: 1.0390 - 1.0475 ▼

AUD/USD: 0.6800 - 0.6865 ▼