AUD/USD Fundamental Forecast – February 1, 2016

The AUD/USD added 19 points to trade at 0.7103 its highest level in 2016 after the greenback fell and oil prices climbed moving markets away from risk aversion and back into commodity currencies. The currency was boosted by oil prices reaching the highest level since 6 January following
production cut headlines from Saudi and Russian officials, while the USD was also on the back foot following disappointing durable goods data (see below). Yesterday’s import/export price index had little impact on the AUD, with import prices down 0.3% and export prices down 5.4%.
Wednesday’s FOMC statement alluded to the economy softening towards the end of last year and it downgraded its assessment of capex. So the policy implications from this release offer little new information, but it all adds up to a Fed on hold for now. Also released last night, US pending home sales held steady in December.
In a surprise move, the Bank of Japan has introduced a negative interest rate to counter the ongoing economic slump in the world's third-largest economy. The rate of -0.1% will mean that the central bank will in fact charge money for holding some deposits. It is hoped this will drive up inflation and boost economic growth.