2016-07-22 13:50:44

This Friday the Australian dollar continues to decline in the currency market, despite the rise in price of the main export commodities of Australia - iron ore. Market participants are waiting for the Australian inflation data for Q2, which is scheduled for the release next Wednesday, July 27 (03:30 GMT+2). Consumer price index (CPI) and core inflation index will be known.

If core inflation index turns out to be below the forecast, probability of interest rate decrease in Australia will raise and will have a negative effect on the Australian dollar. This Tuesday the RBA said that after the release of the consumer price index (CPI), it will be clear if there is a need to lower interest rate next month. Lowering in the interest rates, which is currently at the level of 1.75%, will lead to the decline in the AUD.

Earlier in July, Rating Agency Standard and Poor's downgraded credit rating of Australia AAA from stable to negative. Westpac index of leading economic indicators, released earlier this week, fell in May (-0.20% against the rise of 0.21% a month before).This index evaluates dynamics of the nine indicators of economic activity and reflects the state of the economy in the country.

The decline in oil prices also puts pressure on the Australian currency because of the oil and gas sector is the most important sectors of the Australian economy. On the other hand, US positive macro-economic statistics increases investors’ expectations of interest rates rise by the US Fed until the end of this year, perhaps in September.

Taking into account all the facts mentioned above, it is likely that the pair AUD/USD will remain under pressure until 27 July, when Australian inflation data will become known.

AUD/USD: in anticipation of the Australian inflation data for Q2. Fundamental analysis for 22.07.2016.