The Aussie seems to have settled for now having had a great couple of weeks due to the RBA halting its rate cutting cycle. To my mind the Aussie will hold its position as markets decide which way to bet. We have Aussie retail figures out tonight, as well as a speech from RBA Governor Glenn Stevens so both of these have the possibility of moving rates depending on how positive the news is. I expect they will lend a little support to the Aussie and allow it to strengthen a touch, but there are a couple of other factors to be aware of.
UK Services PMI data is due out tomorrow morning and a decent showing here could help sterling in what has been a pretty quiet week for the UK. I expect sterling to sit in the early 1.80’s (bouncing just above and below this trigger point) if the news is positive, because neither the BofE or RBA look like they are going to do anything with interest rates any time soon allowing the currency pair to settle on a happy medium.
We have the ECB rate decision tomorrow and this could cause a lot of Euro volatility. On the surface European data this week has been good with better than forecast PMI and the overall unemployment rate dropping from 12.0% to 11.9%. However inflation has once again been on the low side, and if you look at unemployment in more detail you see that it actually increased in Italy but was offset by a decrease in Germany. Unemployment is still way too high in Greece, Italy and Spain, and with such low inflation it will be interesting to see if Mario Draghi can continue to calm things down with the Euro. I think the one size fits all approach is going to come under pressure and something will have to give, and there may actually be a little more improvement in AUD EUR rates. Thursday is a gamble in the short term as the ECB may well stick to their guns but definitely worth keeping an eye on.
In the US Friday’s non-farm payroll data is likely to be the main news. The Aussie has made some good headway against its US counterpart climbing over 0.92 in the last few days but there is always a danger the greenback could come back if the Fed start being a little more optimistic. The jobs news could be a good indicator. If you do have an Aussie Dollar transfer to make in the coming days weeks or months and would like some assistance to get the best rate and timing, then feel free to email Colm at [email protected] and I would be happy to explain our currency transfer service.