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Australian Dollar continues to consolidate

Published August 21, 2019

Author: Brett Gordon

The Australian dollar is highly sensitive to the US/China trade relations, that continues to be a problem and of course we have to worry about the global trade situation overall, along with global growth. The US dollar continues to strengthen overall as traders continue to favour US Treasuries as a place to hide, so it makes quite a bit of sense that the AUD/USD continues to drop.

Beyond that, the RBA hands are tied, as it is held hostage by the US/China trade war, with Australia being a major supplier of raw materials to the Chinese economy.If America and the China don’t come to some sort of agreement, the Australian dollar is a sitting duck and will remain in it’s current range and maybe head lower.

Trump’s calls for the Fed to cut rates by 1% have not been met with wide agreement, with Boston Federal Reserve President Eric Rosengren reiterating that US economic conditions are still good and that lowering interest rates could destabilize the financial sector and encourage a debt build-up.

The GBP was one of the more volatile currencies overnight as Brexit news continued to keep markets guessing.  UK Prime Minister Boris Johnson said that preparations for a no-deal Brexit are on track. Johnson called on Germany and France to compromise on Brexit, cautioning that the UK would be ready to leave the EU without a deal on October 31, if necessary.

Upcoming risk events for the currency markets include FOMC meeting minutes tomorrow morning, and the Jackson Hole Symposium tomorrow night