By ForexMansion.com

 

Asian currencies grabbed global investors’ attention due to the important data released from major economies in the Asian Pacific. The Australian dollar is the best performer among Asia currencies, where the AUD has recorded a new multi decades high versus its US counterpart after the Australian consumer prices soared.

 

The Governor Mr. Stevens noted that the economic growth in Australia will moderate during the first three months of the year after the natural disasters that hit the nation in January and February. The RBA has kept borrowing costs at 4.75% as the natural disaster will disrupt economic growth in Australia.   

 

The Australian situation has a positive impact on the nation’s currency (the Aussie) while analysts indicated that the Reserve Bank of Australia is to increase rates by 25 basis points to 5.00% from 4.75% to curb inflation appreciation.

 

The annualized CPI in Australia jumped to 3.3% during the first quarter of the year, from 2.7% a year earlier, the fastest pace in five years.  

 

On the other hand, the producer price index accelerated more than expected during the first three months of the year due to the increases in cost for petroleum refining and electricity, gas and water bills.

 

As for the RBA’s efforts to contain inflation, the Governor Mr. Stevens said that the Australian currency’s surge to a record won’t slow the economy and contain inflation as money market yields signal Reserve Bank will resume raising interest rates, increasing the demand for the Australian dollar.

 

The nation’s currency soared more than 18% against the U.S. dollar in the past year as Stevens lifted rates and a mining-investment boom drove unemployment below 5%. Short-term bond yields climbed and inflation expectations gained the most in more than a month as the data showed the measures that strip volatile prices such as food and energy exceeded economists’ forecasts.

 

In the week ahead, the Australian currency will witness another bullish move against the majors shall the RBA governor turn indeed hawkish on inflation while the contrary might trigger a strong downside correction for aussie, so it will be the main highlight.

 

Major highlights for this week that will affect the AUD/USD pair’s trading:

 

Monday May 2:

 

At 23:30 GMT (Sunday) the Australian economy will release the AiG manufacturing index for April where the previous reading came less than 50 at 47.9.

 

The first quarter house price index at 01:30 GMT that increased by 0.7% in the fourth quarter of 2010. Further the annualized AUD house price index for the year ended March 31, where the previous reading showed an incline by 5.8%.

 

 

On the other hand, the U.S. economy will start the week with the construction spending index for March at 14:00 GMT, where it’s expected to show an increase of 0.3% after the previous decline of 1.4%.

 

The ISM manufacturing data will be released at 14:00 GMT and expected to come at 60.1 compare the previous of 61.2.

 

Tuesday May 3:        

 

The market will be focused on the RBA rate decision, whereas expectations indicate that the RBA will keep the rates unchanged steady at 4.75% though comments from the bank will surely affect aussie strongly, especially as investors expect the bank to result to monetary tightening.

 

The United States will release the factory orders for March at 14:00 GMT, where the previous reading was –0.1% and the expectation is for a rise by 1.5%.

 

Wednesday May 4:

 

Australian Wednesday at 23:30 GMT (Tuesday) will release its performance index for the services sector for the month of April, while the March reading was at 46.5.

 

At 01:00 GMT the Australian economy is to release the home sales index in March that jumped by 0.6% in February.

 

The US ADP employment change is due at 12:15 GMT which expected to show 200,000 added jobs in April from a 201,000 the previous month.

 

Further the USD ISM Non-manufacturing composite has a heavy effect on the market movement, which will be released at 14:00 GMT and expected with further expansion to 57.8 in April from 57.3 during March.

 

Thursday May 5:

 

The Australian building approvals for March will be released at 01:30 GMT after it dropped by 7.4% in February, on the year the index fell the previous month by 21.8%. Retail sales for March are due at 01:30 GMT, where it rose 0.5% in February.

 

At 12:30 GMT the U.S economy will release the weekly initial claims numbers, where the number of people filing for first-time claims for state unemployment insurance has reached 429 thousand.

 

Friday May 6:

 

Australian Friday at 23:30 (Thursday) AUD performance of construction is due after the previous 39.4 in March.

 

As for the United States of America, it will release the infamous report on Friday. The non-farm payrolls at 12:30 GMT are expected to show that the U.S. economy added 196 thousand jobs during the month of April compared with the previous 216 thousand jobs.

 

Unemployment during the month of April is expected to settle at 8.8% while the yearly average hourly earnings index is expected to rise by 1.7%.

 

Any improvement in new jobs in the United States could drive more gains for aussie versus the dollar and send AUD/USD higher on improved risk appetite and eased woes over the outlook for the recovery. 

Originally posted here

Read more about forex technical analysis, forex fundamental analysis and forex news on ForexMansion.com

About ForexMansion.com:

www.ForexMansion.com is a part of the Finance Mansion Network which operates global financial websites. Our goal is to provide our readers with the most accurate, quality and up-to-date technical analysis, fundamental analysis and news in order to assist them in making the right financial decisions.

The Finance Mansion Network includes www.FinanceMansion.com,www.ForexMansion.com, www.StocksMansion.com, www.CommoditiesMansion and many more.