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Australian dollar lower awaiting Fed minutesAustralian dollar lower awaiting Fed minutes
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Published on 18.02.2015 14:15

The Australian dollar is trending lower today as the market awaits the latest minutes meeting from the US Federal Reserve with most expecting the central bank to take a hawkish stance regarding interest rates.

AT 2.36pm (GMT) the Aussie dollar was trading US77.89c at down from US81.15c yesterday.

For the past 12 months the Fed has stuck with the word “patient” when it came to talk of an interest rate rise but some believe the tone will be different this time such as Mike Moran, chief economist at Daiwa Capital Markets America Inc who noted in an interview,

“I expect there was a fair amount of sentiment for dropping the word ‘patient’ in January, although obviously not a majority,”

“A strong push by some on the Fed committee to strip “patient” from the statement would signal that it is likely to be dropped at the next Fed meeting in March and put a June rate hike firmly on the table“ he added.

The only cloud hanging over the Feds decision to move on interest rates is the current inflation numbers, which have sat below the banks, preferred target rate of 2% since 2012 and may be a key factor today.

“Anything that gives us a sense of how willing they would be to hike, even against a low-inflation backdrop, will be important,” said Michelle Girard, chief U.S. economist at RBS Securities Inc. in Stamford, Connecticut.

 “The big question in everybody’s mind is: can they raise interest rates without more tangible evidence, either in terms of wages or with the inflation numbers, that things are moving in the right direction?” Girard said.

The Australian dollar is expected to face a serious test holding on to its recent gains as this news hits the market.

 

The Australian dollar is trending lower today as the market awaits the latest minutes meeting from the US Federal Reserve with most expecting the central bank to take a hawkish stance regarding interest rates.

AT 2.36pm (GMT) the Aussie dollar was trading US77.89c at down from US81.15c yesterday.

For the past 12 months the Fed has stuck with the word “patient” when it came to talk of an interest rate rise but some believe the tone will be different this time such as Mike Moran, chief economist at Daiwa Capital Markets America Inc who noted in an interview,

“I expect there was a fair amount of sentiment for dropping the word ‘patient’ in January, although obviously not a majority,”

“A strong push by some on the Fed committee to strip “patient” from the statement would signal that it is likely to be dropped at the next Fed meeting in March and put a June rate hike firmly on the table“ he added.

The only cloud hanging over the Feds decision to move on interest rates is the current inflation numbers, which have sat below the banks, preferred target rate of 2% since 2012 and may be a key factor today.

“Anything that gives us a sense of how willing they would be to hike, even against a low-inflation backdrop, will be important,” said Michelle Girard, chief U.S. economist at RBS Securities Inc. in Stamford, Connecticut.

 “The big question in everybody’s mind is: can they raise interest rates without more tangible evidence, either in terms of wages or with the inflation numbers, that things are moving in the right direction?” Girard said.

The Australian dollar is expected to face a serious test holding on to its recent gains as this news hits the market.

 


Andrew Masters

Analyst

The power of leverage is the power of Forex.
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