Several concurring events have halted the rise in the Australian dollar and it seems that the pair AUD/USD will conclude this week with the decline. Recent comments of the US Fed representative indicating of possibility of interest rate increase in April will boost short-term rise in the USD, which may continue until the meeting of the US fed on 27 April. Strengthening in the USD against safe-haven currencies and precious metals is obvious. Terrorist attacks in Brussels made investors reluctant to risk. This fact caused the decline in European currency and European indices. In view of all these facts quantitative easing measures of the ECB could have supported the Australian dollar, as this would have increased the demand for European assets and commodities and consequently, on the commodity currencies.

The third factor, which cause the decline in the Australian dollar was the information released on Wednesday by the US Department of Energy about significant increase in the oil and oil products inventories in the USA. Oil inventories in the USA rose by 9.357 million, up to 532.5 million barrels, which has become the highest level since 1930. US oil inventories have been three time higher than expected (forecast of 3.090 million barrels). This news caused the decline in the price of oil by almost 2 USD per barrel. The decline in oil prices reduces revenues to the Australian budget from oil and gas sector and has a negative impact on the price of commodity currencies, including the AUD.

Since the beginning of the year the pair AUD/USD rose by 11% and reached 8-month highs at the level of 0.7680.

Further rise will start to worry executives of the central bank of the country, as high rate of the national currency impedes the recovery of the national economy.

The rise in price of the AUD, will force management of the RBA to take the decision to decline interest rate. Therefore, the decline in the pair AUD/USD will be favourable for the country. The next meeting of the RBA is scheduled for 5 April.




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