- Australian Dollar May Rebound as Markets Retool Fed Policy Outlook
- Jobs Report May Overshadow RBA Rate Decision as Aussie Catalyst
The Australian Dollar faced heavy selling pressure last week, with
prices dropping through the bottom of a range that contained price
action since the beginning of June. The force behind the move lower
came from external factors: an impressively strong second-quarter US
GDP figure and an easing of the FOMC’s concern about persistently low
inflation hinted Janet Yellen and company may move swiftly to raise
rates after the QE3 asset purchase program is wound down in October.
The recovery may prove short-lived however as domestic factors return
to the spotlight. The RBA monetary policy announcement seemingly ought
to take top billing, but officials are unlikely to offer up anything
unheard of in recent months. Another restatement of the commitment to
hold rates unchanged for the foreseeable future may force a pause in
the Aussie’s recovery, but the likelihood of another strong push lower
will probably hinge on July’s employment figures. A net jobs gain of
13,200 is expected, marking a slowdown from the previous month’s 15,900
increase. Furthermore, Australian economic data has increasingly
underperformed relative to consensus forecasts since mid-April, opening
the door for a downside surprise. Such a result is likely to extend
the perceived length of the standstill on the monetary policy front,
undermining yield-based support for the Aussie and forcing prices lower
in earnest.
