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    AUD/USD: the price of iron ore has increased on 22.02.2016

    Amid growing prices of iron ore last weekend and the rise in oil price since opening of the trading session on Monday, the pair AUD/USD has grown today. The rise took place despite a statement of the member of ARB John Edwards that the Australian dollar was overvalued. Edwards believe that the exchange rate would reach the level of 0.6500 against the current price in the pair AUD/USD above the level of 0.7100.

    In general, negative situation in the world economy has a negative impact on the commodity currencies, including the AUD. Inflation rate and pressure on price are decreasing. Annual inflation rate in January amounted to 0.4%. Unemployment rate in Australia in January rose by 6% versus the forecast of 5.8% and 5.8% a month ago).

    This week market participants will be focused on the wages in Q4 on Wednesday 02:30 (GMT 2), and manufacturing expenses data in Q4. This index shows inflation and the size of the current and expected manufacturing expenses in the private sector. Investment expectations will show the decline in the capital investments in the private companies. (Forecast of decline by 3.0% versus the decline of 9.2% in Q3). The report on wages will show moderate demands for wages amid the growing unemployment).

    It is expected that at the meeting of ARB on 2 March interest rates will be left unchanged. However, market participant believe that RBA will reduce interest rates twice during this year in May and June. The rate can be decreased to 1.5% from the current level of 2.0% .

    Despite local strengthening in the pair AUD/USD caused by the rise in the commodity prices, the pair AUD/USD will remain under pressure. We recommend to open short positions.


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