AUD/USD Weekly Fundamental Analysis for July 11-15, 2011

By ForexMansion.com

The AUD/USD pair fluctuated last week as the Aussie retreated due to the dovish stance for the Reserve Bank of Australia. On the other hand, the US dollar recorded gains against other major currencies as risk aversion controlled the market.

Australia's currency is to continue its downside movement as expectations indicated that the Reserve Bank of Australia is to keep the rates unchanged at 4.75% during the upcoming period to support the recovery.

The Reserve Bank of Australian (RBA) held rates steady at 4.75% for the seventh consecutive month, putting downside pressure on the Australian dollar (Aussie), while Australia's dollar has witnessed another drop against the dollar as the RBA focused on the growth.

The recovery in Australian is under pressure after the natural disaster that hit the nation during the first three months of the year, but the nation showed some improvements this period, at least showing that the recovery is on track.

On the other hand, greenback still dominates the currency market due to lack of confidence in the global recovery, which increased demand on the dollar as a safe heaven, opening the way for some gains against the majors.

Major highlights for this week that will affect the AUD/USD pair's trading 

Monday July 11:

The Australian economy will release home loans for May at 01:30 GMT, where the previous reading showed an increase by 4.8%.

Tuesday July 12:

The Australian economy will release the NAB business confidence for June at 00:30 GMT, where the previous reading was 6; while the NAB business confidence had a previous reading of 1.0.

From the United States the week will start with the May trade figures at 12:30 GMT, where the deficit is expected to have widened to $44.1 billion from $43.7 billion.

Also on Tuesday will be the minutes of the last FOMC meeting on June 21&22 at 18:00 GMT. Comments from the Feds about the weak economy or signals for more monetary easing and support to the economy will be the main mover on the market, yet in general, the minutes are not expected to add anything new to what Bernanke already said. 

Wednesday July 13:

At 00:30 GMT, the Australian economy will release the Westpac Consumer Confidence for July, where the previous reading was down by 2.6%.

The U.S. will release the minor impact Import Price index for June at 12:30 GMT and expected with 0.8% drop following 0.2% rise in May and with 13.3% rise on the year following 12.5%.

Also at 18:00 GMT the Budget Statement for June is due and the deficit is expected to have widened to $65.0 billion from $57.6 billion.

Thursday July 14:

It will be a busy day for the U.S. economy with heavy data due for release at 12:30 GMT. The start will be with the Producer Price Index for June which is expected with 0.2% drop reversing the same earlier gain and rise 7.4% on the year; Core PPI is expected steady in June at 0.2% while to rise slightly on the year to 2.2% from 2.1%.

At the same time, the June retail sales are expected also with weakness, where sales less autos are expected with 0.1% rise following 0.3% and excluding auto and gas with 0.4% gain following 0.3%.

The weekly jobless claims are also to be released at the same time after the improvement in the claims reported the previous week when they eased to 418 thousand.

Business inventories report is due at 14:00 GMT for May and expected at 0.6% following 0.8%; it is a very minor report and does not affect the market.

Friday July 15:

The U.S. economy will also end the week on a high note with heavy data starting at 12:30 GMT with the Consumer Price Index for June. The index is expected with 0.1% drop following 0.2% rise and to hold at 3.6% on the year, yet core inflation is expected to rise 0.2% on the month following 0.3% and tick slightly higher to 1.6% on the year following 1.5%.

At 12:30 GMT as well the Empire Manufacturing Index for July is expected with a strong rebound to 4.0 from -7.79. Industrial Production for June is due at 13:15 GMT and expected with 0.4% increase following 0.1% and capacity utilization to rise to 77.0% from 76.7$.

Finally University of Michigan will end the day at 13:55 GMT and the preliminary July reading is expected with improvement to 72.5 from 71.5. 

Originally posted here