Australian Dollar could be set further falls
I am of the opinion the Australian Dollar could be in for a rough time. Retail sales data recently fell to the worst levels in four years and this is predominantly due to the increase in property prices. High wage growth areas such as Melbourne and Sydney are becoming more and more expensive and Australians are being forced to spend their money on necessities rather than luxuries which is hitting the economy. Foreign investors are willing to pay the escalated prices which is not helping the problem.
FED Rate hike could mean trouble for AUD
There is also an anticipated rate hike by the Federal Reserve in the US. The Australian Dollar is a favourite for investors due to the promises of high returns due to the attractive interest levels offered. The Australian interest rate is currently set at 1.5%, if the FED raises rates as predicted to 1.5% on Wednesday this would put Australia and the US on par. With the US Dollar considered to be a safe haven currency investors could well leave the Australian Dollar for the safety of the US dollar which could cause Australian Dollar weakness.
Unemployment Data and Mid-year Economic and Fiscal Outlook data could influence AUD
The Mid-Year Economic and Fiscal Outlook is published by Australian government, updates the economic and fiscal outlook from the previous budget. If there is a dovish tone the Aussie could suffer. This could well occur considering the dip in retail sales.
Unemployment data is due in Thursday and I expect there to be a drop slightly above the expectation of 5.5% which could cause Australian Dollar weakness.
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