The Week Ahead: After touching a near nine-month during high the latter part of last week the AUD has opened the short trading week above 0.7600 USD. With little economic data scheduled at the front end of the truncated week the market response to the US Federal Reserve’s statement last week is likely to continue to drive the AUD’s short term prospects. The USD was battered in the aftermath of the Fed’s FOMC meeting and statement with the AUD benefiting from the enhanced risk appetite. In this statement it was suggested that a more gradual path of interest rate rises in the US was possible with two, rather than four a more likely option with global economic weakness continuing to weigh heavily. Activity at the start of the week should provide an indication as to whether or not the sell-off in the USD was overblown.
With the absence of notable domestic data in Australia this week, RBA Assistant Governor Edey and Governor Stevens’ speeches on Tuesday will be a focal point for the week. It has not been long since RBA Board Member John Edwards and Assistant Governor Debelle nominated a lower AUD – 0.6500 USD was nominated by Edwards – as being preferable for the Australian economy. So, with the currency around 17% higher than this arbitrary target – or “personal opininon” as these attempts to talk down the AUD are often packaged – any further attempt to jawbone the currency lower would not come as a surprise. With RBA Governor Stevens’ speech expected to cover both the Australian economy and global risks it could provide an excellent forum to try and force the AUD lower.
In New Zealand this week consumer sentiment, visitor arrivals and credit card spending figures will be released on Monday with Trade Balance data due on Thursday ahead of the Easter long weekend. The NZD has opened around 0.6790 USD slightly off the high seen late last week against the USD.
Following the somewhat ham-fisted statements by ECB President Draghi following the last ECB Monetary Policy meeting pressure is emerging from German Budesbank President Weidmann for the ECB to curtail further monetary policy stimulus. Weidmann has long agitated for individual euro zone member nations to implement necessary reforms as a means to energize the region’s economy rather than monetary policy measures being seen as the silver bullet. Key data in Europe this week includes manufacturing and services PMI as well as ZEW economic sentiment. The ECB’s Economic Bulletin will also be eagerly awaited on Thursday with the data utilized at the recent ECB meeting released for general consumption.
British price data will take centre stage on Tuesday before retail sales figures are released on Thursday. The fallout form last week’s budget continues with the surprise “sugar tax” on soft drinks a key talking point. Legal action by drink makers has not been ruled out and will provide a different topic for discussion alongside the ongoing Brexit debate.