2016-11-23 11:09:32

Although rating agency S&P Global Ratings has downgraded Australian rating in the middle of this year, investors continued to buy profitable Australian assets and Australian currency. The country can lose sovereign rating AAA, if the Parliament refuses from the reconstruction plan for the budget.

Despite a series of recent cuts, interest rate of Australia, which is at the level of 1.5%, is one of the highest in the world among countries with the developed economies. This fact forces investors to buy the Australian dollar, as this trading bears low-risk and brings stable profit.

The pair AUD/USD had sharply declined only after the US election on 8 November after the

Rise in the USD on expectations that President Donald Trump will increase budget expenditures and reduce taxes, in order to spur inflation and economic growth in the country.

Market participants are focused on the future of the US interest rates. Most investors expect that the key interest rate will be raised next month. According to the futures on the Fed rate, investors evaluate probability of monetary policy tightening in December at 94%. And this is a very strong factor contributing to large-scale strengthening of the USD in the foreign exchange market.

President Trump also supports the removal of restrictions on energy production in the USA. It will also trigger the decline in commodity prices, including oil and coal, which are the main items of export commodities of Australia.

Commodity currencies, including the Australian dollar are under pressure when prices of commodities go down. Last Wednesday the price iron ore sharply (one of the main items of export commodities in Australia) went down at the commodity exchange in China, which had a strong negative impact on the AUD. Futures for iron ore fell that day by 6.5% to 577 yuan (83.95 USD) per ton, which followed after the previous decline of 6%.

However, today, the pair AUD/USD is growing for the third consecutive session.

Yesterday, the AUD received support from the speech of the Deputy Governor of the Reserve Bank of Australia Christopher Kent.

Mr. Kent said that the RBA believed that the decline in investments to the Australian mining sector has reached 80%, and the terms of trading now must improve. Kent’s speech made investors believe that the RBA will keep rates unchanged at 1.5% in 2017, which will support the Australian dollar.

If the decline in commodity prices (oil, gas, coal and iron ore) continues as well as the rise in the USD, the pair AUD/USD will soon resume the decline.

Today, market participants will be waiting for important US macro-economic data. At 16:30 (GMT+3) - weekly data on the number of primary requests for unemployment benefits will be released. The forecast is 250 000, the previous value is 235 000 and orders for durable goods in the U.S. for October.

At 17:45 GMT – Markit PMI in the U.S. manufacturing sector in November.

At 18:00 – Home sales in the US in October.

At 21:00 – Minutes of the last meeting of FOMC.

Tomorrow there is a day off in the USA . U.S. markets will be closed.AUD/USD: AUD received support.  Fundamental analysis for 23/11/2016