Market Update – 27th July 2017 – Is 0.8000 The New 0.7000? U.S Fed Non-Committal On QE Unwinding & Next Rate Hike

A poor local CPI figure released yesterday morning has been well and truly overwhelmed by the latest U.S FOMC meeting in which Janet Yellen left rates steady at 1.25% but promised to start unwinding years and years of quantitative easing (QE) which has grown to around US$4.5 trillion in assets on the Feds balance sheet. However all this has resulted in AUD/USD surging to fresh two and half year highs and not a sell-off as you’d expect. And to determine why this may be the case we need to dig a bit deeper. Many traders were expecting more hawkish rhetoric from the Fed and a more solid timeline as to when unwinding of this QE would take place and when the next rate hike is to occur, however of course that didn’t eventuate and a lot remains up in the air.

So for importers let the good times roll and with AUD/USD above 0.8000 on the wholesale market, your imports are the cheapest they’ve been in over two years. If you’d like to take advantage of rates as they stand please do contact me for a Forward Contract quote. Alternatively a quote on a Vanilla Option to protect 0.8000 is also an option.

AUD EXCHANGE RATES:

AUD/USD – 0.8003

AUD/GBP – 0.6107

AUD/EUR – 0.6815

AUD/NZD – 1.0647

AUD/JPY – 89.011

DATA RELEASES TODAY:

USD – Core Durable Goods Orders at 10.30pm