Investing.com - The Australian dollar inched higher against its U.S. counterpart on Friday, but the Aussie held near a three-and-a-half month low amid expectations the Federal Reserve could begin to scale back stimulus at its next policy meeting and following comments from Reserve Bank of Australia Governor Glenn Stevens.
AUD/USD clawed back from 0.8910 on Friday, the pair’s lowest since August 30, to subsequently consolidate at 0.8968 by close of trade on Friday, up 0.33% on the day but 1.49% lower for the week.
The pair is likely to find support at 0.8910, Friday’s low and resistance at 0.9080, Thursday’s high.
Expectations for a small reduction in the pace of the Fed’s USD85 billion-a-month asset purchase program at its upcoming policy meeting were boosted after stronger-than-forecast U.S. retail sales data for November released on Thursday added to signs that the economic recovery is deepening.
An agreement on a two-year U.S. budget deal was also seen as removing an obstacle to the winding back of monetary stimulus.
The dollar came off highs as investors locked in profits, while data showing that U.S. producer price inflation fell 0.1% in November sparked concerns over the sluggish inflation outlook.
The soft inflation data did little to alter expectations that the Fed will begin withdrawing stimulus in the next few months after the latest U.S. nonfarm payrolls report showed that the U.S. economy added more jobs than expected in November.
The central bank is scheduled to meet December 17-18 to review the economy and assess monetary policy.
The Aussie came under additional pressure after Reserve Bank of Australia Governor Glenn Stevens said Thursday the central bank wanted to see the local currency’s exchange rate closer to USD0.8500 in order to support the economy.
Official data released Thursday showed that the number of employed people in Australia rose by 21,000 last month, exceeding expectations for a 10,000 rise, after a downwardly revised 700 decline in October.
The report also showed that Australia's unemployment rate ticked up to 5.8% in November, from 5.7% the previous month, in line with expectations.
In the week ahead, investors will be focusing on Wednesday’s outcome of the Fed’s monthly policy meeting, and a press conference with Chairman Ben Bernanke will be closely watched.
Meanwhile, minutes of the RBA’s most recent policy-setting meeting will also be in focus.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, December 16
China is to produce preliminary data on the closely watched HSBC manufacturing index. The Asian nation is Australia’s largest trade partner.
The U.S. is to release reports on industrial production, manufacturing activity in the New York region and the balance of foreign and domestic investment in U.S. securities.
Tuesday, December 17
The Reserve Bank of Australia is to publish the minutes of its latest policy meeting, which contain valuable insights into economic conditions from the bank’s perspective. The nation is also to publish a report on an index of leading economic indicators as well as a report on new vehicle sales.
The U.S. is to release data on consumer inflation and the current account.
Wednesday, December 18
The U.S. is to release data on building permits, a leading indicator of future construction activity, and housing starts.
The Federal Reserve is to announce its federal funds rate and publish its rate statement, which outlines economic conditions and the factors affecting the monetary policy decision. The U.S. central bank is also to publish its economic projections for the next two years. The rate announcement is to be followed by a press conference with Chairman Ben Bernanke.
Later Wednesday, RBA Governor Stevens is due to testify before the House of Representatives Standing Committee on Economics, in Canberra.
Thursday, December 19
The U.S. is to publish data on existing home sales, manufacturing activity in the Philadelphia region and initial jobless claims.
Friday, December 20
The U.S. is to round up the week with revised data on third quarter GDP.
AUD/USD clawed back from 0.8910 on Friday, the pair’s lowest since August 30, to subsequently consolidate at 0.8968 by close of trade on Friday, up 0.33% on the day but 1.49% lower for the week.
The pair is likely to find support at 0.8910, Friday’s low and resistance at 0.9080, Thursday’s high.
Expectations for a small reduction in the pace of the Fed’s USD85 billion-a-month asset purchase program at its upcoming policy meeting were boosted after stronger-than-forecast U.S. retail sales data for November released on Thursday added to signs that the economic recovery is deepening.
An agreement on a two-year U.S. budget deal was also seen as removing an obstacle to the winding back of monetary stimulus.
The dollar came off highs as investors locked in profits, while data showing that U.S. producer price inflation fell 0.1% in November sparked concerns over the sluggish inflation outlook.
The soft inflation data did little to alter expectations that the Fed will begin withdrawing stimulus in the next few months after the latest U.S. nonfarm payrolls report showed that the U.S. economy added more jobs than expected in November.
The central bank is scheduled to meet December 17-18 to review the economy and assess monetary policy.
The Aussie came under additional pressure after Reserve Bank of Australia Governor Glenn Stevens said Thursday the central bank wanted to see the local currency’s exchange rate closer to USD0.8500 in order to support the economy.
Official data released Thursday showed that the number of employed people in Australia rose by 21,000 last month, exceeding expectations for a 10,000 rise, after a downwardly revised 700 decline in October.
The report also showed that Australia's unemployment rate ticked up to 5.8% in November, from 5.7% the previous month, in line with expectations.
In the week ahead, investors will be focusing on Wednesday’s outcome of the Fed’s monthly policy meeting, and a press conference with Chairman Ben Bernanke will be closely watched.
Meanwhile, minutes of the RBA’s most recent policy-setting meeting will also be in focus.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, December 16
China is to produce preliminary data on the closely watched HSBC manufacturing index. The Asian nation is Australia’s largest trade partner.
The U.S. is to release reports on industrial production, manufacturing activity in the New York region and the balance of foreign and domestic investment in U.S. securities.
Tuesday, December 17
The Reserve Bank of Australia is to publish the minutes of its latest policy meeting, which contain valuable insights into economic conditions from the bank’s perspective. The nation is also to publish a report on an index of leading economic indicators as well as a report on new vehicle sales.
The U.S. is to release data on consumer inflation and the current account.
Wednesday, December 18
The U.S. is to release data on building permits, a leading indicator of future construction activity, and housing starts.
The Federal Reserve is to announce its federal funds rate and publish its rate statement, which outlines economic conditions and the factors affecting the monetary policy decision. The U.S. central bank is also to publish its economic projections for the next two years. The rate announcement is to be followed by a press conference with Chairman Ben Bernanke.
Later Wednesday, RBA Governor Stevens is due to testify before the House of Representatives Standing Committee on Economics, in Canberra.
Thursday, December 19
The U.S. is to publish data on existing home sales, manufacturing activity in the Philadelphia region and initial jobless claims.
Friday, December 20
The U.S. is to round up the week with revised data on third quarter GDP.