The US dollar is looked forward to get the better off its trades with the Australian currency today as investors take in the distress caused by ex-tropical cyclone Oswald in eastern Australia. Some price corrections can be perceived as the commodity dollar can get a boost from increased risk sentiment borne off upcoming economic data from the world’s largest economy.
Bloomberg reported that floodwaters in eastern Australia due to ex-tropical cyclone Oswald forced thousands of people to flee their homes and caused millions of dollars of damage. The Insurance Council of Australia declared a catastrophe for parts of Queensland and New South Wales, which together account for about half the nation’s economy. The severe weather left six people dead, disrupted mining operations in Queensland and caused an estimated A$187 million ($196 million) in insurance losses. While the damage is less than floods and storms two years ago, Treasurer Wayne Swan has acknowledged that costs would have an impact on the federal budget.
The combination of Yasi and the floods took off about 1 percentage point of gross domestic product, according to Stephen Walters, JPMorgan Chase & Co.’s chief economist in Australia. “A back of the envelope” calculation suggests these floods may cost up to 0.3 percent, he said. Further, Wesfarmers Ltd. cut its coking coal sales forecast from its Curragh mine in Queensland to a range of 7.5 million tons to 8 million tons for the year ending June 30, saying heavy rains and localized flooding this month has hit production and disrupted deliveries.
With the perceived impact that Oswald has on the exchanges of the Aussie, a short position is advised for the AUDUSD. However, be on the lookout for probable technical corrections especially as the Advance US GDP report, US labor market data are scheduled for release today. Also, the Federal Reserve will announce the outcome of its two-day Federal Open Market Committee meeting, speculated to push risk confidence higher.
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