Aussie Dollar: Central Banks in Focus

Central Banks Remain in Focus

After a somewhat sluggish start to the week, Fed Dudley views on inflation confirm a unified Fed willing to look through the soft Q1 inflation print provided a spark to the dollar bulls.  But given that Dudley’s public edict is almost always fully in sync with that of Yellen, anything other would have been the shocker. While the markets remain dollar bid tentatively, there remains an air of uncertainty on this move as the USD reality check is likely only one bad US economic data print away.

What had the makings of a very productive trading week for the Aussie dollar was dealt a blow after Moody’s downgraded a group of the leading Australian banks. Discussion around the downgrade has overshadowed this morning RBA minutes and with the USD trading buoyant on hawkish Fed speak, theses external developments should continue to   weigh on near-term sentiment

Nonetheless, the Aussie remains supported on the dips as the downgrade reaction was far from an off the cliff scenario. And while  credit rating agency negative  downgrades can have a short-term impact,  they seldom have a lasting influence on currency markets even  more so given the market’s recent pivot to all things central banks which should  remain the centre of attention throughout the day

Risk appetite appears to be holding firm after Wall Street’s strong performance overnight in Tech stocks and investors overall enthusiasm over the state of the US economy. This

Nothing too worrisome for Aussie bulls in  this morning RBA  minutes as the Central Bank’s  views remain consistent and steady  but worth noting  the  minutes  did not take into consideration their views of the bumper Jobs report last week

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Stephen Innes

Stephen Innes

Head of Trading APAC at OANDA
Stephen has over 25 years of experience in the financial markets and currently based in Singapore as the Head of Trading Asia Pacific with OANDA. Stephen's market views focus on the movement of G-10 and ASEAN Currencies. His views appear in Bloomberg, CNBC.Reuters, New York Times WSJ and the Economist. His media appearances include Bloomberg TV & Radio, BBC International, Sky TV, Channel News Asia, ASTRO AWANI and BFM Malaysia. Stephen has an extensive trading experience in Spot and Forward FX, Currency and Interest Rate Futures, Money Market Derivatives and Precious Metals. Before joining OANDA, he worked with organisations like Nat West, Chemical Bank, Garvin Guy Butler, and Sumitomo Mitsui Banking Corporation. Stephen was born in Glasgow, Scotland, and holds a Degree in Economics from the University of Western Ontario.
Stephen Innes