2016-07-20 13:05:25

Today’s statistics showed that Westpac leading economic indicator fell in May (-0.20% against the rise of 0.21% a month earlier). This index tracks the dynamics of nine indicators of economic activity and evaluates the state of economy in the country.

Recent US data is all positive. According to the US data released yesterday, the number of permits to construct in June, as well as new housing construction has significant grown (1.153 million and 1.189 million respectively). Positive macro-economic indicators raised investors’ expectations that the US Fed may increase interest rate before the end of the year, perhaps in September.

Oil prices are also decreasing.

All these factors and anticipation of the release of Australian consumer price index for Q2 on 27 July put pressure on the AUD. If inflation data for Q2 will be negative, the RBA may lower interest rates in August (at the meeting on August 2nd). On Tuesday, the RBA said that consumer price index (CPI) will show if there is a need to lower interest rates next month.

In case of lowering in the interest rate, which is currently at the level of 1.75%, the AUD will fall in the market.

Difference between the monetary policies of the Central banks in Australia and the USA will be one of the main movement drivers in the pair. The AUD/USD is likely to decline.

AUD/USD: AUD remains under pressure. Fundamental analysis for 20.07.2016.