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.

Click to enlarge

IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.