Skip to content
News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
Oil - US Crude
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
More View more
Australian Dollar Outlook: Commodities Weigh on AUD/USD. Eyes on FOMC, RBA Minutes

Australian Dollar Outlook: Commodities Weigh on AUD/USD. Eyes on FOMC, RBA Minutes

Daniel McCarthy, Strategist
AUD/USD Chart

AUTRALIAN DOLLAR FORECAST: BEARISH

  • Chinese intentions on steel production drive iron ore prices and AUD/USD
  • Energy commodities are facing supply chain issues as prices squeeze higher
  • RBA minutes and FOMC ahead, can Australian bond yields rise to turn AUD?
How to Trade FX with Your Stock Trading Strategy
How to Trade FX with Your Stock Trading Strategy
Recommended by Daniel McCarthy
How to Trade FX with Your Stock Trading Strategy
Get My Guide

The Australian Dollar continued to lose ground over the week as Australia lost more jobs than expected on Thursday. Australia’s main export commodity, iron ore, moved lower. This seemed to bear more influence than rising bond yields on the exchange rate.

Chinese government actions are likely to continue impacting iron ore prices as they work to implement their ‘shared prosperity’ policy. This includes reducing carbon emissions, which leads to a reduction in steel production being planned and less demand for iron ore. It is also likely to be influenced by the lack of supply of iron ore coming from Vale, Brazil. The country is not expected to be back at full capacity until the end of next year. Markets will be alert for changes in Chinese demand.

Energy commodities could see heightened volatility amid elevated prices due to

capacity concerns remaining in several key pockets of the global supply chain. Namely, the Mexican Gulf storm season, the English Channel power connection outage and shipping bottlenecks. The Baltic freight index is showing the cost of transporting energy commodities at the most expensive in 13 years.

How to Trade FX with Your Stock Trading Strategy
How to Trade FX with Your Stock Trading Strategy
Recommended by Daniel McCarthy
How to Trade FX with Your Stock Trading Strategy
Get My Guide

Bond yields could play a role for AUD/USD going forward as the spread between Australian and US 10-year government bond yields continues to move towards parity. If Australian rates should move higher than US ones, traditional yield investors, which have previously been large buyers of Australian debt, may start returning into Australian fixed interest.

Looking ahead, central banks will be the focus for AUD/USD as the RBA will release their September monetary policy meeting minutes this Tuesday. On Wednesday, RBA Assistant Governor, Michel Bullock, will deliver a speech. Later in that day, the all-important FOMC meeting will take place and markets will be focused on the timing of any tapering. After a relatively benign US CPI print this week, expectations are low for any significant change of tact for the Fed.

How to Trade AUD/USD
How to Trade AUD/USD
Recommended by Daniel McCarthy
How to Trade AUD/USD
Get My Guide

AUD/USD AGAINST IRON ORE AND AUSTRALIA-US 10 YEAR GOVERNMENT BOND YIELD SPREAD

Chart created in TradingView

--- Written by Daniel McCarthy, Strategist for DailyFX.com

To contact Daniel, use the comments section below or @DanMcCathyFX on Twitter

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES