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AUD steady. markets await Powell Statement

Published July 9, 2019

Author: Brett Gordon

The Australian Dollar rallies a bit during the trading session yesterday and will continue the overall consolidation that we have seen. Beyond that, the USA/China trade negotiations continue, and that of course will continue to move this market around as well.

I think at this point the AUD is trying to get more upside which we may see as cooling of tensions between America and China are happening. However another factor in this market is the Federal Reserve which is going to be possibly cutting rates. If this happens we should see the USD fall.

USD Holds Gains on Reduced Rate Cut View

The US Dollar was steady across the board holding on to gains made on the back of Fridays non-farm payrolls data.  The better than expected number has effectively priced out the likelihood of a 0.50% cut in interest rates in July, however a 0.25% cut remains almost fully priced in.
Focus this week turns to Fed Chairman Jerome Powell who is expected to provide further clues on the near-term outlook for monetary policy this week at his semi-annual testimony to the US Congress.  Meanwhile, markets are still keeping an eye on US-China trade talks, which are expected to resume this week.

A growing theme by foreign exchange analysts are talking about is the risk that Donald Trump may move beyond words in the quest for a weaker dollar. The research comes as Trump has intensified criticism of both the Federal Reserve and other countries’ currency practices. The U.S. leader tweeted last week that Europe and China are playing a “big currency manipulation game,” and called on the U.S. to “MATCH, or continue being the dummies.”