The USD decreased after morning trades
The forex trades in Sydney resulted in certain decrease of the USD caused by the intention of the traders to make some changes after the UK and US markets will reopen in Tuesday. So the morning USD rate was at 103.16 yen and the Euro at $1.5787. According to the currency strategist at NAB Capital Markets – John Kyriakopoulos – the long holidays in the UK and US will not cause any significant changes. The last week stagflation trend will have its impact this week also and the crude oil price will remain the main factor defining the currencies exchange rates.
The increase of the crude oil prices has contributed to the stagflation trends in the US. The US economy experiences inflation growth and slowdown of the economic growth. Moreover the growth of the crude oil prices affects the USD rate in relation to so called “safe currencies” like the Japanese Yen and Swiss franc. The Federal Reserve and US housing sector numbers is expected to give some new directions for the markets. At the same time the PCE core inflation for the April is expected to be moderate and will probably ease the situation. Moreover John Kyriakopoulos added that the low USD would retain Australian dollar/USD rate at almost the highest level since the December 1983.
At the previous week the Australian currency reached the point of $0.9654 thus causing the talks about possible parity with the USD in the nearest future especially in case the Central Bank of Australia will increase the interest rates. Its cash target rate at the moment is 7.25%. Moreover the level of the commodity prices also supports the Australian currency.
According to the senior forex analyst at Thomson IFR Markets – John Noonan the changes in the crude oil prices were quite speculative that may cause some corrections to the Australian dollar/USD rate. The sell-off in the oil prices may contribute to the delay of the attempts of the Australian dollar to reach parity.
