Compass Global Markets' Blog

Market Update - 27th July 2016 - Aussie Infaltion & U.S Fed Meeting Round Out What Could Be Volatile 24 Hours

Posted by Patrick Downes on July 27, 2016 at 9:26 AM

Some interesting moves on the Aussie dollar yesterday with a surprise half a percent rally occurring across the board around 2.28pm yesterday afternoon. I've been unable to find out the reason behind the move or whether it was just some big AUD buying action from one of the banks or the RBA, but if someone knows, please do get in touch.

Aussie CPI is the big data point today and is due for release around 11.30am. Expectations are as I mentioned yesterday that CPI will buck the recent trend and turn positive to the tune of 0.4%, after a -0.2% figure in the first quarter of 2016. The CPI figure is crucial as bets have been rising fast that the RBA will cut rates at their meeting next Tuesday. But nothing is set in stone and I do think the RBA will be watching this CPI data very closely. As a result a whopping number either way could near guarantee a cut to interest rates or take it completely off the table next Tuesday and so will have a dramatic impact on the Aussie today unless the figure is bang on expectations.

The action doesn't stop there though with the U.S Fed converging on Washington at around 4.00am AEST for their latest monetary policy meeting. The market is expecting no change to U.S interest rates which currently sit at 0.5%, but as is always the case the market tend to move pretty wildly on Fed rate announcements and AUD/USD is no exception.

Final remark - unless you're extremely confident about the direction of the Aussie dollar then I'd suggest trying to remove any market risk you have buy buying currency today or using Forwards to remove risk.

DATA RELEASES TODAY:

AUD - CPI at 11.30am

GBP - Prelim GDP at 6.30pm

USD - Fed FOMC Statement and Rates Decision at 4.00am

AUD EXCHANGE RATES:

AUD/USD – 0.7517

AUD/GBP – 0.5715

AUD/EUR – 0.6840

AUD/NZD – 1.0631

AUD/JPY – 78.775

***Above rates are indiciative wholesale rates and intended as a guide only***

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Patrick Downes

Senior Corporate FX Dealer

 Compass Markets

Contact Patrick for a quote on 0431 278 632

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