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Rally in Australian dollar to end
Published on 19.12.2017 17:05

The Australian dollar has had a good run over the last week climbing from a low of US75.50c to around US76.60c in today’s trading session  but some say the rally may be about to end due to local and external news due for release this week.

The minutes meeting released earlier today from Australia showed the RBA was satisfied with the overall performance of the economy and noted that they expect the jobs market will keep improving in 2018 and wage growth will also pick up which has so far proved to be a real burden on inflation.

The major concern the RBA had was the level of household debt and low inflation which may be a reason to keep rates on hold for quite some time.

With no other major news due out of Australia this week, the focus will be on the US with Donald Trumps proposed tax reform due for a final vote and if the news coming out of America is too be believed, the tax bill is certain to pass and be signed into law by Trump.

Just how much the tax reform bill is priced into the market is anybody’s guess but it seems as if when it is finally passed, the US dollar is in for a big rally at the expense of all major currencies including the Australian dollar

"A further break higher is likely to be difficult with an expected mixed local data pulse this week and the passing of US tax reform, which should be USD positive in the short-term," said Con Williams, economist at ANZ Bank.

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Andrew Masters

Analyst

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