The Australian dollar showed a good performance in the first half of the last week, but has slowed its gains in the second. What can we expect from the Aussie in the next week, can it reach parity with the US dollar?
The fundamentals were largely favorable for the currency. The most important event for the Australian currency was Chinaâs decision to keep its interest rates unchanged. China is the biggest trading partner of Australia and it has direct impact on the Australian currency. The anticipation of the rates hike was weakening the Aussie, now this expectation doesnât drag the currency down, allowing it to appreciate. Without higher interest rates we can expect the Chinese economy to continue its growth and support Australiaâs economy and currency.
The economic environment in Australia itself was also good. The last weekâs reports were, for the most part, positive, including the
But we should be cautious about being too optimistic for the Australian dollar. There is still a possibility for China to raise its interest rates. Europe is still plagued by the debt crisis. And the future of Australiaâs economy is also uncertain as not all economic data was good. The housing starts posted the significant slump by 13.2 percent last week and this week the leading indicators predicted to show a decline.
The AUD/USD currency pair is expected to trade sideways, for the most part in the range between 0.9840 and 0.9920.
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