Australian Dollar Outlook - 26 August 2014

By @ibtimesau on
Euro and U.S. dollar banknotes
Euro and U.S. dollar banknotes are seen in this picture illustration taken in Prague January 23, 2013. Credit: REUTERS/David W Cerny REUTERS/David W Cerny

Bell FX Currency Outlook: Ranges were limited with Europe taking an extended weekend and little new data released.

Australia: AUD/USD traded in tight ranges and is currently sitting at just under USD0.9300. Moody's downgraded Western Australia's credit rating to Aa1 (stable) from Aaa (negative), a similar action to that taken by Standard & Poor's in September 2013. Moody's quoted the state's rising indebtedness, its volatile revenue base (one quarter of which is now based on royalties) and the expenditure pressures on the Government as the result of the quickly growing population as reason for the downgrade.

Majors: The USD was not helped by a lower than expected reading on US new home sales for July (though revisions softened the blow) while there was also a lower than expected Dallas Fed Manufacturing reading for August.

EUR retained earlier (post Jackson Hole) losses as data there remained weak and the consequences of ECB president Mario Draghi's speech were absorbed. Initially this helped boost the AUD as it rallied against the EUR and JPY, however by the end of the session it was flat.

French Prime Minister Manuel Valls announced that he would dissolve his government after reported battles within his cabinet over whether the belt-tightening measures taken by President Hollande were impeding France's recovery.

The move was reportedly agreed to with President Francois Hollande who is expected to request Valls form a new government administration tonight.

Economic Calendar26 AUG NZ Trade Balance JulAU Roy Morgan Weekly Consumer Confidence Index US Durable Good Orders JulUS Consumer Confidence Index Aug

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