Australia’s Political Crisis Continues Pressuring AUD

During the Asia-Pacific session, the market's focus revolved around USD following the release of the FOMC's August meeting minutes.
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Thursday, August 23 – Asia Session Recap

During the Asia-Pacific session, the market’s focus revolved around USD following the release of the FOMC’s August meeting minutes.

The market perceived the minutes to be slightly dovish, resulting in USD weakness with DXY briefly slipping back below 95.00.

This was in response to the Fed’s remarks that ‘escalation of trade disputes was potentially a consequential downside risk for the US economy‘.

Furthermore, alongside trade, the Fed noted housing and emerging markets as increasing sources of downside risk.

Nevertheless, many participants still believe it will be appropriate to raise rates.  Adding that it will soon no longer be appropriate to refer to monetary policy as ‘accommodative’.

Overall, as the Fed’s outlook towards monetary policy remains unchanged, USD has pared its initial weakness. DXY is firmly back above the 95.00 handle and GBPUSD back below the 1.29 handle.

Elsewhere, political uncertainty continues to weigh on AUD. According to the  ABC News, a further three cabinet ministers have submitted resignations.

Amongst those resigning is Finance Minister Cormann, who advised the PM he does not have party support. Cormann added there should be a party room meeting to resolve leadership.

In the following press conference, PM Turnbull stated he is waiting for a petition with a majority of party signatures. If received, he will call for a party meeting and will not stand if the party seeks a vote.

For additional research, we’ve posted news articles from around the web below.

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