The Reserve Bank of Australia left its official interest Rate on hold on Tuesday at 1.5% and its statement gave no forward guidance on where the RBA will have rates in 9 months from now. It acknowledged both the strengths and weaknesses of the local economy but failed to give anything away that would give traders a reason to buy or sell the Aussie on mass. We will need to wait to read the monthly minutes for a closer understanding of what was being said behind closed doors. The Aussie Dollar is mostly unchanged post the statement. If you would like to read the statement click here.
The US Federal Reserve started its two-day policy meeting on Tuesday and will release a statement at 4am Aest Thursday Morning. Just like the RBA traders are eager to see any forward guidance from the Fed with the market currently 50/50 on whether or not we will see another rate hike in June or July. US economic data suggest the economy could handle another rate increase bringing the official Fed cash rate to 1% just half a percentage point behind the RBA. The year 2001 was the last time the RBA and US Fed had rates at the same level and the AUD was 0.48c. Friday will see the latest official US jobs numbers for April and after last months shocker of 98,000, traders are expecting something closer to 180,000 for April. What I will be eager to see is what the revised number is for March because coupled together with a strong April jobs number it has the potential to surge the USD higher.
In other news on Tuesday the Euro Zone Unemployment rate is now 9.5% still significantly higher than where it needs to be but under the 10% level, it maintained for years post the GFC. The latest April China PMI number released yesterday showed the manufacturing sector faltered last month with a reading of 50.3 well below the 51.3 the market expected. Today sees the official unemployment number for New Zealand, which will be out by the time you are reading this report. The market expects the official unemployment rate to be 5.1% so a number above or below this level is likely going to create volatility on the Kiwi Dollar. The official German unemployment rate is also released today along with the latest Euro Zone GDP figures. Inflation has recently picked up across the Euro Area, which has supported the Euro and is a sign that growth is on the rise. The Euro currency could be considered cheap when you consider the potential upside in the European economy over the coming 3 to 5 years. We will also get a little teaser today with the US Private ADP jobs report, which always comes two days prior to the official government number. The US Fed’s statement at 4am AEST Thursday morning will overshadow all other economic news releases so when you wake up down under you will see increased volatility on currency markets from 4am AEST.
About the Author: Andrew Barnett
Andrew is a professional trader and successful investor who has a strong focus on education. He is a regular Sky News Money Channel Guest and one of Australia’s most awarded and respected financial experts, and is regularly contacted by the Australian Media for the latest on what is happening with the Australian Dollar. Director at LTG GoldRock, Andrew Barnett, guides thousands of traders around the world in the live market on a daily basis, advising them on buy and sell directions, as well as trading his own personal account. Andrew, a regular key-note speaker at trading and wealth-creation events throughout the Asia Pacific region, is an authorized representative registered with the Australian Securities and Investment Commission (ASIC).
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