On Tuesday, the Bank of Australia will make its interest rate decision. Economists believe that the Bank will leave interest rate unchanged at the level of 1.75%.
As long as investors’ concerns about the consequences of the UK’s exit from the EU are decreasing, their rise appetite is increasing. Investors buy such risky assets as commodity currencies, CAD, NZD and AUD, while the purchase of the yen is reducing.
Due to uncertainty about the outcome of the Parliament elections held last Saturday and possibility of the downgrade of the sovereign credit rating of Australia (Rating Agency Standard and Poor's said that Australia’s rating "AAA" can be lowered), today's trading day the pair AUD/USD started with a gap down of about 50 points.
However, during Asian trading session and after the release of the positive inflation data (inflation in Australia rose by 1.5% on annual basis 0.6% on monthly basis in June), the AUD started to rise again.
At the European session the rise in the pair EUR/USD continued.
Today, US financial markets are closed due to Independence Day in the country. That is why trading activity in the financial markets will reduce by the end of European session.
Before the announcement of the interest rate decisions by RBA, the pair is likely to be at the level of 0.7500.
It is expected that the rate will be left unchanged and investors’ will focus on the following up comments of the Bank in order to determine further movement in the pair AUD/USD.
US Fed will make interest rate decisions on 27 July. It is likely that the rate will be also left unchanged at the level of 0.5%.
Australian dollar is supported by the rise in oil prices, as oil and gas sector is one of the most important sectors of the Australian economy.