Australian Dollar Outlook - 18 June 2014
By Christine Gaylican | June 18, 2014 11:49 AM EST
An employee inspects U.S. dollar bills before changing it to Philippine Pesos inside a money changer in Manila September 19, 2013.
Australia: Currently, the AUD is trading at around USD 0.9330 which is its weakest level since 9 June. In yesterday's minutes of its June board
meeting, the RBA said it was unclear how much the tough federal budget and expected declines in mining investment will impact the economy.
In addition, most currencies lost ground overnight with the US Dollar in favour ahead of a statement from the US Federal Reserve on Thursday
morning (Australian time) in which the Fed is expected to announce an upgrade to its economic forecasts.
Looking briefly at the RBA's minutes, it's worth noting in particular that the Bank noted "low interest rates were working to support demand, although it was difficult to judge the extent to which this would offset the expected substantial decline in mining investment and the effect of planned fiscal consolidation. Those uncertainties were likely to take some time to resolve."
This suggests the Bank will lean towards maintaining the expansionary policy setting until it is clear that growth is above trend and spare capacity in the economy is reducing. There is little on the domestic calendar today and the key event in offshore markets tonight is the FOMC policy meeting.
Majors: Looking at the majors, the broadly stronger-than-expected US inflation print brought the timing of US rate hikes back into focus and supported the USD ahead of the FOMC meeting tonight. Emerging market currencies bore the brunt of the selling once again, with high yielders in
the firing line.
As written, the FOMC meeting tonight is critical for the USD, with expectations the Fed's monthly asset purchases will be scaled back by a further USD10bn to USD35bn per month, the first hike in the Fed Funds Rate (FFR) remaining some way off and a modest downward revision to the previous GDP growth forecast range of 2.8-3.0% for 2014.
18 JUN US FOMC Rate Decision
US TAPERING: PURCHASE OF TRSY'S/MBS
UK BANK OF ENGLAND MINUTES
For the latest pricing, ranges visit www.bellpotter.com.au
To contact the editor, e-mail:
Most Popular Slideshows
- Taylor Swift Named Forbes' Second Highest Paid Country Musician [PHOTOS]
- Forever Lost: Indescribable Anguish for Malaysia Airlines MH17 Families, Remains of Some Victims May Never Be Found (PHOTOS)
- Global Aviation Accidents: UN to Form Safety Task Force, Gov'ts Should Share Intelligence Info to Avert Future Incidents on Flying Over Warzones (PHOTOS)
- Lunch with the Gods: Pope Francis Eats with Vatican Workers in Cafeteria
Join the Conversation
- ACT Party's Demand to Re Consider Maoris Privileges Evokes Reprimand
- Opinion Poll in New Zealand Shows National Party Far Ahead in Popular Support
- “Women should not laugh in public” - Turkish Deputy PM says
- Iran Leader Asks Muslims to Supply Arms to Palestine, Calls Israel ‘Rapacious Wolf’
- Canada Claims Good Progress in EU Trade Pact Despite Germany’s Defiant Postures
- Transfer News: FC Barcelona, Man Utd to Compete for Juan Cuadrado's Signature as Fiorentina Reveal Willingness to Sell
- Hilary Duff's New Music Video Chasing the Sun Goes Viral on YouTube [WATCH VIDEO]
- LeBron James to Return to Miami, Face Heat on Christmas Day 2014
- Shanghai Stock Exchange Will Not Extend Trading Hours
- Qatar's Surging Real Estate Prices Won't Affect Thriving Economy – Report