Australian Dollar outlook For April 28, 2011

Australian Dollar outlook For April 28, 2011 : US Fed Chairman, Ben Bernanke, reaffirmed the view that US interest rates will remain at record low levels for quite some time to come. The USD was sold off as a result. Investors bought into the higher yielding currencies, such as the AUD. The AUD had already been given a boost during yesterday's local session after Australian Q1 CPI data surprised on the upside.

The market had been expecting first quarter CPI to come in at 1.3% QoQ and 3.0% YoY. The actual result of 1.6% QoQ and 3.3% YoY immediately sparked speculation of an imminent rate hike from the RBA and drove the AUD to a high close to USD1.0850. While the RBA is not expected to make any changes at next month's meeting there is now a real chance they could perhaps increase official interest rates as early as June. Given the contrasting outlook for interest rates here in Australia and in the US it seems that the majority of the market is looking for the AUD rally to continue.

Majors: US dollar weakness across the board was the main theme for the markets overnight. As mentioned above, The US Federal Reserve Chairman has virtually dismissed any possibility for US interest rates to be increased any time soon. Within the FOMC statement it was noted that energy and commodity prices have "pushed up inflation in recent months", indicating that inflationary pressures may be building, but with the US labour market still in such a dire situation, the start of a tightening cycle is still a long way off. Such a stance virtually gives the markets a green light to sell the USD. The EUR rose to just below USD1.4800, with further gains expected given the fact that the ECB is likely to outpace the Federal Reserve in terms of official rate hikes.Source hken.ibtimes.com... For the latest updates PRESS CTR + D or visit Stock Market news Today

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