The price of the Australian dollar dropped sharply after the release of data on consumer price inflation in the country. Thus, the consumer price index slowed to 0.6% in Q1 of 2014 compared to 0.8% in the previous quarter. On this background traders expect that the Reserve Bank of Australia may revise its monetary policy towards easing, despite the refusal from further interest rate cuts.
China's flash manufacturing PMI increased to 48.3 in April, against 48.0 in March. Analysts had expected growth to 48.4. The figure, lower than 50, indicates a slowdown. We recall that China is the largest importer of Australian goods.
Currently the quotes of the Australian dollar are supported by seasonal increase in iron ore prices in the world, but analysts expect a drop in demand in a few months. We maintain a medium-term negative outlook for the Australian dollar with targets at 0.9100 and 0.8900.
Wish you the profits!
FXFINPRO Capital Analytical department.