The Australian dollar traded slightly weaker as the market changed its focus from the risk aversion linked to last week’s downing of a Malaysian Airlines plane MH17 and the Gaza crisis to this week’s long-awaited inflation data. However, trading remained light due to a national holiday in Japan.
In the 5 p.m. trading in Sydney, the Aussie traded at US93.92 cents after earlier being limited to a tight spread of between US93.84 cents to US94.01 cents. The currency closed at US93.95 cents on Friday.
“CPI data on Wednesday will be the data focus in Australia this week where the market is looking for a quarter-on-quarter rise of 0.5 per cent on the headline figure and 3 per cent year on year,” Royal Bank of Canada currency strategist Michael Turner told The Australian. “Ahead of that we watch for remarks by Reserve Bank of Australia Governor Glenn Stevens who speaks on Tuesday.”
Local traders are presently waiting for Tuesday’s speech by Reserve Bank of Australia chief Glenn Stevens, which is then followed by Wednesday’s disclosure of the consumer price index in the June quarter.
Most economists estimate that the CPI may have exceeded the RBA’s target of 2-to-3 percent in the April-June quarter, though underlying factors indicate that it will slow down in the final six months of 2014 through into next year. This is due to the sluggish domestic demand, anemic wage growth as well as rising unemployment rate.
Analysts are also keenly monitoring the US dollar this week as various economic data such as on manufacturing is set to be released. More signs of US economic recovering means the Aussie will lose ground against the greenback. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
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