Commodities weakness weighs on AUD

The AUD is facing a big week with some significant challenges on the way.

AUD
Source: Bloomberg

Risk sentiment remains skewed to the downside with key commodities for Australia including iron ore, oil and gold declining. The government is also set to release the mid-year economic and fiscal outlook release where surplus forecasts are likely to be pushed back further. Key commodity price forecasts are likely to be downgraded and this will see revenue/receipts drop off significantly.

Either way, this will be strenuous for the local economy and in turn the AUD. Pressure will also mount on the monetary policy side of things with calls for the RBA to act. On the other side of the equation, it’s a big week for the USD with traders eyeing the FOMC meeting for some direction.

Risk sentiment remains skewed to the downside with key commodities for Australia including iron ore, oil and gold declining. The government is also set to release the mid-year economic and fiscal outlook release where surplus forecasts are likely to be pushed back further. Key commodity price forecasts are likely to be downgraded and this will see revenue/receipts drop off significantly. Either way, this will be strenuous for the local economy and in turn the AUD. Pressure will also mount on the monetary policy side of things with calls for the RBA to act. On the other side of the equation, it’s a big week for the USD with traders eyeing the FOMC meeting for some direction. AUD/USD is just holding on to the $0.8200 handle and traders could look to sell into strength or momentum plays on a break below $0.8200. Tomorrow we have the RBA monetary policy meeting minutes and manufacturing activity out of China to look out for.

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