Forex Trading Review: AUD Loses Ground on Budget Concerns – May 20, 2014

Forex Trading Review: AUD Loses Ground on Budget Concerns - May 20, 2014

In the latest forex trading review of fundamentals, we can see that the US dollar showed signs of strength as risk aversion gripped the financial markets once more. Martial law has been declared in Thailand and this kind of geopolitical tension usually turns out to be positive for the safe-haven dollar. There have been no reports released from the US economy in the latest New York trading session. Today, a bunch of Fed officials are scheduled to give testimonies and probably provide a preview of the FOMC minutes to be released later this week.

As for the euro, it managed to hold on to its recent levels to the US dollar, despite the downbeat remarks from Bundesbank President Weidmann. Of course he did stress that exchange rate targeting might wind up with harmful effects on the economy but he did point out that further easing might be needed, increasing the odds of an ECB stimulus announcement next month. German PPI is up for release today and a flat reading is eyed.

The pound made a small recovery in the past few forex trading review sessions, as traders booked profits ahead of today’s CPI release. Price pressures probably improved in April, as analysts are expecting to see an increase in CPI from 1.6% to 1.8%. Underlying inflation might still point to weak spots though, with PPI input to stay flat and PPI output to show a mere 0.2% uptick.


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The comdolls weakened in the latest trading sessions, with the proposed budget cuts and downbeat RBA minutes weighing most on the Australian dollar. The Kiwi also saw its share of losses despite the stronger than expected PPI readings released in the early Asian trading session. Meanwhile, the Loonie managed to stay resilient but the wholesale sales release later today might change that as a mere 0.4% uptick is slated to follow the previous 1.1% gain.

The yen had a mixed performance in the latest forex trading review, as pairs simply reacted to currency-specific data. There were no reports released from Japan recently, except for the stronger than expected core machinery orders data. The Nikkei closed lower yesterday and reached new session lows, indicating that risk aversion is taking over price action, which is good for the lower-yielding yen.

To contact the reporter of the story: James Brennan at