Aussie‘s performance beat most of G10 currencies in May. Technically,
AUD/USD breached April’s range and is heading towards March high with a
positive outlook.To get more news about WikiFX, you can visit wikifx news official website.
June 2nd will see Reserve Bank of Australia release its interest rate decision, which will likely remain unchanged according to market expectation. Previously, the reserve bank board agreed that the policy package is working as expected, and board members consider the best approach to be maintaining the current policy arrangement and keep a close watch on the economic and financial results. In the following months, RBA will possibly maintain the present stance while carefully observing any new change.
Whether the large-scale fiscal and monetary policies will bring the economy to a V-shape recovery is still a question, and should the economy fail to rally as expected, the central bank will be under pressure and faces challenge in taking further measures to support economy. We expect Australias GDP to shrink about 10% in the first half of 2020.
In conclusion, if the RBA resume a mild forward guidance, the Aussie will possibly face downside risks.
Overnight USD/CAD rate dropped 228 pips to 1.3773, a new low since March 16th. This has been the largest intraday decline since March.
Bank of Canada‘s outgoing Governor Stephen Poloz maintains a dovish forward guidance before leaving the post, saying that the central bank is “doing the best to ensure a solid foundation for economic recovery”. Poloz is leaving the post in June, and he had previously warned that massive monetary stimulus will be needed for Canada’s economy.
As the Bank of Canada remains open to introducing more unconventional measures, the Canadian dollar may face even more unfavorable risks.
Canada will release on Friday the GDP for Q1, 2020, which is expected to see the greatest decline since the data was first recorded and published in 1961.