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    AUD/USD: in the medium-term the pair will be under pressure on 29.02.2016

    According to the data released this morning profit of the Australian companies fell by 2.8% against the forecast of 1.8% in Q4. This negative data reflects current state of affairs in the business circles of the country. Reduction of profit indicates decline in consumer expenses and imports/exports activity of the country. The data released last week showed that index of wages has amounted to 0.5% in Q4 against 0.6% in Q3. Increased unemployment rate in January ((6% against 5.8% a month ago) calls into doubt stability in the labor market of Australia and stops employees from demands to increase wages.

    According to University of Melbourne (TD Securities), inflation fell by 0.2% in February against the rise of 0.4% in January.

    Therefore, price pressure in Australia is weakening and inflation rate is going down.

    Falling prices of iron ore and other commodities have negative impact on the Australian currency and contribute to the reduction of capital investment in the mining sector of Australia.

    Gloomy prospects of the world economy described at the meeting of G20 last week can have a negative impact on the prices of commodities and quotes of the commodity currencies, including the pair AUD/USD.

    On Tuesday (05:30 GMT 2) interest rate decision of ARB will become known. It is likely that ARB will reduce interest rate from 2.0% in order to support national economy. If it does not happen tomorrow, Central bank might reduce interest rate late. Economists expect that rate will be reduced twice: in May and July and will gradually reach the level of 1.5%.

    According to some estimates Australian dollar is overvalued by 10%, a member of the board of the Australian Reserve Bank John Edwards believes that a fair rate is at the level of 0.6500.

    The pair AUD/USD will remain under pressure in the medium-term.


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