The not too hawkish message from the Fed saved the Aussie from losing 0.93, but this didn’t last too long.
The pair is now below the line, the lowest since mid June. Here are three reasons:
- Weak Australian fundamentals: Australian building approvals fell by 5%, significantly worse than a drop of 1% expected. Despite the volatility in this figure, these are bad news. In addition, quarterly import prices tumbled by 3%, also worse than -1.4% predicted. Average cash earnings joined the global trend and rose by only 0.4%, weaker than 0.7% predicted. Only private sector credit advanced nicely, by 0.7%, more than 0.4% predicted.
- A late reaction to the Fed: As we said in the live coverage (you can see it here) of the FOMC, there is sometimes a late reaction to the statement, as analysts weigh in. We are seeing a stronger dollar also against other currencies.
- End of month flows: This is the last trading day of the month and all kinds of unexpected things happen. Adjustments to portfolios can shake currencies in various ways, and this is happening now.
The next significant line of support is 0.9220, after the range was broken. For more, see the AUDUSD forecast.
And here is the chart:
