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Currency Market Analysis

Jun 16, 2021 | Currency Market Analysis

Global Themes

Aussie nears two-month lows as focus turns to Fed

• Fed caution pressures Aussie
• AUDUSD nears two-month lows
• Fed decision due at 6.00am AEST

Fed caution hits AUD

The AUD was lower overnight with markets on edge ahead of tomorrow’s critical US Federal Reserve decision.

The Fed is widely expected to maintain policy settings – most notably its USD120bln per month in bond purchases – but the recent jump in price pressures has caused markets to fret that some Fed board members might consider withdrawing this stimulus program.

Last week, inflation was reported at 5.0% in headline annual terms – the highest rate since 2008.

The Fed decision is due at 6.00am AEST.

Two-month lows

The AUDUSD fell ahead of the Fed’s decision with the AUDUSD down 0.3%.

The AUDUSD fell towards two-month lows.

The Aussie was weaker in most other markets with the AUDEUR nearing five-month lows.

Data deluge

While the tomorrow’s Fed decision is the economic highlight, there’s plenty of other data also due.

Markets are looking to a major speech from RBA governor Philip Lowe tomorrow.

Australian employment is also due tomorrow.

Key Chinese data is due today with industrial production and retail sales numbers released at 5.00pm.

Additionally, today’s NZ current account number comes ahead of tomorrow’s March-quarter GDP reading.

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