AUD/USD Daily Fundamental Analysis for July 12, 2011

By ForexMansion.com

The AUD/USD pair dropped with the beginning of the week, as the US dollar dominated the currency market due to risk aversion. The sell-off in the high yielding currencies helped the dollar to control the AUD/USD pair's movement.

The disappointing employment data from the U.S. economy increased fears in the financial market, which pushed investors to abandon risky assets where the dollar benefited to record more gains against its major counter parts.

On the other hand,Chinese inflation increased to 6.4% during June, despite the Chinese government and PBoC's measures to contain inflation. The expectations refer to more tightening in the Chinese monetary policy, which will hurt the China's major row material suppliers like Australia.

The Reserve Bank of Australian (RBA) has held the rates unchanged at 4.75% for the seventh consecutive month, putting downside pressure on the Australian dollar (Aussie).

On Tuesday, the Australian economy will release the NAB Business Confidence for June at 00:30 GMT, where the previous reading was 6. On the other hand, the NAB Business Conditions was 1.0 the previous month.

At 12:30 GMT, the U.S. economy will release the trade balance for May, the previous reading showed a deficit of $43.7 billion which is expected to widened to $44.1 billion.

The Fed will release the minutes from June 21-22 FOMC meeting, which will grab investors' attention and increase pressure on the AUD/USD pair. 

Originally posted here