Australian Dollar: No Rate Hikes Expected

The Australian, New Zealand and Canadian dollars all ended the day slightly weaker against the US dollar. All eyes are on the Reserve Bank of Australia rate decision tonight. No changes to interest rates are expected, but after the surprise rate hike from New Zealand last week, there is a minor risk that the RBA could follow in their neighbor’s footsteps

Remember, whenever rates are left unchanged, there is no accompanying statement or press conference. Prime Minister Howard commented on the booming economy today despite the fact that manufacturing sector PMI dropped to a six month low. Meanwhile USD/CAD touched its seventh month low again today on the back of strong inflation figures. However the currency staged an impressive intraday reversal on the back of firmer US numbers and softer oil prices. The long wick in today’s USD/CAD candle suggests that we could see more strength in the currency pair tomorrow, but with no Canadian data due for release, that will continue to be dependent upon oil prices and US data.