Lee Hardman, Currency Analyst at MUFG, notes that the Australian dollar has underperformed in the Asian trading session alongside other commodity related currencies.
“Renewed weakness in commodity prices has been the main driver as the price of crude oil has declined sharply over the last couple of weeks. It follows comments from RBA Governor Stevens late last month that the recent rebound in the Australian dollar and commodities may have been getting a little ahead of themselves.
Renewed weakness in the price of crude oil has accelerated following comments from Saudi Arabia late last week which has cast doubt on the ability of oil producers to reach an agreement to freeze output. Mohammed bin Salman, the deputy crown prince, warned that Saudi Arabia will only freeze its output if Iran and other major producers do so.
Domestic data releases overnight were also on the softer side ahead of tomorrow’s RBA policy meeting. Retail sales growth was flat in February which the third consecutive month of more subdued growth lowering the annual rate of growth to its lowest rate since September 2013. The report will add to nervousness amongst long Australian dollar positioning ahead of tomorrow’s RBA policy meeting. The sharp strengthening of the Australian dollar in recent months has increased the likelihood that the RBA may display some unease.”
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