Another Week of Weakness for Aussie?

The Australian dollar fell sharply last week, touching the lowest level in 3 years against its US counterpart. Will the slide continue or the currency has found its bottom? Tomorrow’s meeting of Australian policy makers may give an answer to this question.
The Aussie (as the Australian currency is nicknamed) started this week poorly. There will be several important events over the week and some of them promise even more negativity for the currency.
The most important factor for the Australian dollar will likely be the Reserve Bank of Australia policy meeting. Some traders hope that interest rates will remain the same, but the vast majority of market participants expect a cut by 25 basis points. Perhaps even more important will be wording of the accompanying statement, not the decision itself. The minutes of the June gathering will be released on August 9 and may also impact the currency.
The employment report is another thing for traders to watch. Forecasters predict slower employment growth and an increase of the unemployment rate. If this is indeed the case, the Aussie will likely take hit.
Overseas news can also affect the Australian currency, especially data from China, Australia’s main trading partner. Among most important releases will be reports about trade balance and inflation. China’s fundamental data was on a weak side lately and if the trend of poor news will persist the Aussie will surely see new lows soon.
All in all, the future looks rather bleak for the Australian dollar. Indeed, Forex Crunch believes that the currency will continue its decline once the 90 per US dollar level is breached (and this has already happened) unless Australian macroeconomic reports will be extremely good. DailyFX is more cautious, saying that “another volatile outing looks likely as the economic calendar fills out with an ample supply of high-profile event risk”.

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