AUD/USD Daily Fundamental Analysis for July 19, 2011

The fears still dominate the market after the US failed to reach agreement on raising the debt ceiling and the European debt crisis escalated, supporting the haven demand and damping the appeal of higher yielding currencies.

The Australian dollar continues its downside movement for a third day in a row on speculation the European policy makers are unable to resolve the debt crisis that threatens the global economy.

Regarding the situation in Australia, the economic growth continues its expansion, but the recovery will face more obstacles in second half of the year, and the central bank is still aiming to revitalize the recovery. The RBA’s board decided this month to leave the rates steady at 4.75% to support the economy escape recession after the first quarter contraction.

On Tuesday, The Reserve Bank of Australia will release its July minutes at 01:30 GMT for the last meeting when the central bank kept interest rate steady at 4.75%. The statement already reflected the dovish stance for the RBA and more confirmations on this outlook for the bank will further pressure aussie to the downside.

The U.S. economy will release at 12:30 GMT the housing starts index for June, where the previous reading was at 560 thousand and expected to rise by 2.5% to 574 thousand.

The building permits index is expected to drop by 1.5% to 600 thousand from 612 thousand.

Written by

Forex Mansion