By FXEmpire.com
Outlook and Recommendation –
The AUD/USD closed the month at 0.9720. The chart below shows the trading range for May.
The Australian dollar (AUD) suffered an almost 7% loss in May as risk aversion jumped higher, the outlook for global growth deteriorated and the central bank cut interest rates – a challenging combination for the high-beta, growth sensitive AUD. The CFTC reports a record net short position of US$3.5 billion, as sentiment has turned violently against AUD. However, based on a soft-landing in China and an important yield differential, AUD should outperform into yearend, closing at 1.02.
The Australian dollar (AUD) has been in steady depreciation mode since early February, reaching a level as low as US$0.9582 per AUD. Proximity does count for the Australian economy. Evident signs of economic deceleration in both China and India are mirrored in Australia, influenced by commodity price deflation and lower export revenue. Since February 24th, the aggregate CRY commodity price index has been on a steady decline; copper prices have virtually erased all gains achieved in 2012. Gold prices have also suffered a similar decline, yet the renewed phase of global financial stress may increase demand for gold as a temporary safe-haven asset in the near term. Declining retail sales, downward adjustment in housing prices and lower manufacturing activity compound the challenges affecting the Australian macroeconomic landscape.
FxEmpire provides in-depth analysis for each currency and commodity we review. Fundamental analysis is provided in three components. We provide a detailed monthly analysis and forecast at the beginning of each month. Then we provide more up to the data analysis and information in our weekly reports.
Central Bank Name: Reserve Bank of Australia
Date of next meeting or last meeting: Jun 05
Current Rate: 3.75 % (- 0.50) June 05 meeting the RBA did reduce rates by .25bps but this was in June.
Statement highlights of last meeting: The Board reduced the cash rate twice in late 2011, which took rates for most borrowers back to about their medium-term average levels. Those rates then retraced a little of that decline during the past few months, as lenders recouped increases in funding costs relative to the cash rate. At its first couple of meetings in 2012, the Board held the cash rate steady, but noted that the inflation outlook would provide scope for easier monetary policy, if needed, to support demand. The data coming to hand over the past two months suggested that it was appropriate for a further step in that direction. Accordingly, at its May meeting, the Board decided on a further reduction in the cash rate. In deciding the size of the adjustment, the Board judged that it was desirable for financial conditions to be easier than those which had prevailed in December, and that this required a 50 basis points reduction in the cash rate, on this occasion, in order to deliver the appropriate level of borrowing rates.
Economic events for the month of June affecting AUD, JPY, NZD and USD
|
Time |
Cur. |
Event |
Forecast |
Previous |
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|
Friday, June 01 |
||||||||
|
12:30 |
USD |
8.1% |
8.1% |
|||||
|
12:30 |
USD |
150K |
115K |
|||||
|
14:00 |
USD |
53.9 |
54.8 |
|||||
|
Tuesday, June 05 |
||||||||
|
04:30 |
AUD |
3.75% |
3.75% |
|||||
|
Wednesday, June 06 |
||||||||
|
01:30 |
AUD |
0.5% |
0.4% |
|||||
|
Thursday, June 07 |
||||||||
|
01:30 |
AUD |
-5.0K |
15.5K |
|||||
|
01:30 |
AUD |
5.1% |
4.9% |
|||||
|
23:50 |
JPY |
1.0% |
||||||
|
Tuesday, June 12 |
||||||||
|
21:00 |
NZD |
2.50% |
||||||
|
Wednesday, June 13 |
||||||||
|
21:00 |
NZD |
2.50% |
2.50% |
|||||
|
Wednesday, June 20 |
||||||||
|
22:45 |
NZD |
0.3% |
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Click here to read AUD/USD Technical Analysis.
Originally posted here
