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AUD range-bound ahead of the Federal Reserve decision

Published May 1, 2019

By Nicholas Cork

Another night of consolidation for the AUDUSD ahead of US PMI data due tonight and the Federal Reserve rates decision due early tomorrow. The currency traded within a 0.7020/0.7070 range, testing the lows in our day after Chinese PMI data was slightly weaker than expected, however, the negativity was short-lived as the focus turned back to the Beijing trade talks and AUD drifted back towards 0.7050 where it starts today’s session.

The US Fed meeting is gathering in importance as US data stays strong, and the just-released CNBC Fed Survey showed 63% of survey respondents forecast a 2020 rate hike and some survey respondents believe a US rate hike ‘could and should happen this year.’ Trump has also offered his opinion ahead of the Fed decision, tweeting that ‘China is adding great stimulus to its economy while at the same time keeping interest rates low. Our Federal Reserve has incessantly lifted interest rates, even though inflation is very low, and instituted a very big dose of quantitative tightening. We have the potential to go up like a rocket if we did some lowering of rates, like one point, and some quantitative easing. Yes, we are doing very well at 3.2% GDP, but with our wonderfully low inflation, we could be setting major records &, at the same time, make our National Debt start to look small!’

In Brexit news, the GBP moved higher overnight as reports suggested the UK Government had made meaningful progress in its talks with the opposition Labour Party. The Euro was also firmer after positive Euro-Zone data was released overnight – their GDP was better than expected at 1.2% for Q1, while the unemployment rate was also on the improve at 7.7% vs market expectations of 7.8%. End of month USD selling flows also aided these moves.

AUD likely to remain rangebound ahead of the Federal Reserve decision, and unfortunately afterward also! Keep an eye on developments in Venezuela…