Despite the rise in oil prices caused by the sharp reduction in the US oil inventories last week, the pair AUD/USD is declining at the end of the trading week. The decline in the pair has increased after yesterday’s ECB’s monetary policy decision and profit taking at the end of the trading week in short positions on USD.
On Thursday the European Central Bank left monetary policy unchanged and President Mario Draghi have not announced introduction of the new stimulus measures or gave any indications that such measures can be introduced later for the first time in two years. European stock indices and European government bonds fell in price, as well as the commodity currencies.
The decline in the US oil reserves seems to be only temporary, and next week the oil reserves may increase once again. Only few market participants expect that OPEC will be able to reach an agreement to freeze oil production at the upcoming meeting in Algeria.
It is unlikely that the rate will be increased by the US Fed in September, which increases a chance of monetary policy easing in Australia. A weak national currency would have supported such sectors of economy as tourism, education, oil and gas and mining.
Forecast of the Central Bank of Australia suggests that inflation rate in the country will remain low in the near future. Inflation indicators, the increase in retail sales in August and the data on the production costs in the private sector for Q2 demonstrated poor figures (0.0% and -5.4% respectively). The Reserve Bank of Australia has implemented monetary policy easing in May and August, reducing the rate from 2.0%, (which has maintained since last May) to 1.5%.
The Reserve Bank of Australia may reduce the rate further on 4 Oct, when at the next meeting or in November in order to accelerate economic growth, if inflation remains low, which will be a negative factor for the AUD
Today’s news will include a speech by Fed Boston President Eric Rosengren(at 14:45 (GMT+3). It will be interesting to know his opinion about the prospects for the US monetary policy after the release of the US negative macro-economic statistics and yesterday's ECB meeting. His comments can provide further support the the USD.
At 20:00 the report of the oilfield services company Baker Hughes will be released, which will show the number of active drilling rigs in the USA. This is an important indicator of the development of the US oil sector of economy. This data may have a significant impact on the oil prices and commodity currencies such as the Canadian and Australian dollars. The increase in the number of drilling rigs may adversely affect oil prices and the Australian dollar.