The Australian dollar is trading under pressure at .7635 level on the back of a recovery on the US greenback.
“Most of the drivers supporting the Aussie dollar are on the wane now, so it is not surprising we see it (Aussie dollar) under a little pressure,” said Greg McKenna, chief market strategist at CFD and FX provider AxiTrader.
“This is a massive week of data – retail sales, inflation data, the Reserve Bank of Australia’s (RBA) decision and February trade data – maybe traders are expecting a mild undershoot of data and a slightly dovish RBA,” he added.
It’s quite difficult to know at the moment. But given Australian data has underperformed the uptick in global data releases for the past 3 months, perhaps that’s not a bad assumption.
The latest update on Friday showed Australian data has dipped back into negative territory. That could change today with solid inflation and retail sales.
“Looking at the RBA and its potential impact on the currency, I doubt they’ll be in any hurry to cut – or signal a move in that direction – given they are fighting a battle to restrain rampant house price growth and investor loan demand right now,” McKenna noted.
But that doesn’t mean they won’t signal some concern about the economy.
He added that until we see how the data flows here in Australia, and across the planet this week, it’s probably right for Aussie dollar traders to be cautious.
According to McKenna, the key right now is just like different sectors of global stock markets, and different nations are benefitting from traders and investors differing views of winners and losers.
“Forex markets are no different right now. The Yen and Euro have differing outloooks, the pound looks good, the Mexican pesos and Korean won are doing well. So it’s about traders estimate who will be the winners and losers,” McKenna said.
Another big event that will be of interest to Aussie dollar traders is the upcoming meeting between Chinese president Xi and US president Trump.
“A trade war is still a low probability I think. But it would not be good for anyone in the global economy. And Australia would be unable to avoid the actual and psychological fallout if this week’s meeting goes badly,” McKenna said.
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