Aussie steady in a quiet Friday trade

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Friday, May 27 2016

There were no data releases from Australia this morning. Aussie was in decline in the past few weeks. The initial drop was accelerated after a surprisingly low Australian inflation (CPI) reading was released near the end of April and then was followed up in early May by a Reserve Bank of Australia interest rate cut to a record low 1.75%. Subsequently, the central bank lowered inflation forecasts and hinted at further potential rate cuts.

At the same time that the Australian dollar has been heavily pressured this month, the US dollar has been in recovery mode as increased anticipation of a near-term rate hike by a more hawkish Federal Reserve has fueled a rebound in the US dollar. This, in turn, has helped prompt a drop in gold prices, with which the Australian dollar is often positively correlated.

Aussie is currently being traded few points above 0.7220 level. Pair is likely to find support around 0.7150 handle and resistance above 0.7250 level. Later today, in the US session, Prelim GDP and Consumer Sentiment figures are scheduled for a release.

More in this category: « Pending Home Sales climbed 1.4% UK consumer confidence reflects persistent doubts about the economy »

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