Analysts at Westpac Banking Corporation, (Westpac), explained that whatever the motives behind the yuan’s fall, it has added weight to AUD/USD.
Key Quotes:
“A quiet local calendar kept the Aussie focused on offshore developments such as trade tensions and some softness in commodity prices.
A stronger US dollar was also a factor in the kiwi’s fall to 2 year lows, but most attention was on the Reserve Bank of New Zealand’s policy statement. The RBNZ said that the next move on interest rates could be up or down and sounded a little more gloomy on the NZ economy. AUD/NZD rose above 1.09, to highs since late May.
In the week ahead, the RBA seems certain to keep its cash rate at 1.5% but there will be interest in the statement, on factors including the pressure on mortgage rates from the rise in banks’ funding costs. In terms of Australian data, we will see May updates on retail sales, building approvals and the trade balance. Of these, retail sales is probably most market-sensitive, with the RBA somewhat concerned over consumer spending.”
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