Australian Dollar May Rise on RBA, Economic Outlook, Strong Risk Appetite

The Australian Dollar may rise on the U.S. Federal Reserve’s next meeting, and there is a high degree of expectation that the Bank of Canada will follow suit. This would be a big plus for the Australian Dollar against the Canadian dollar, and a bearish news story would not do any damage to the Aussie Dollar.

The U.S. Federal Reserve is considering raising the interest rate by one or two points at their next meeting. They are expected to consider doing this after the European Central Bank (ECB) cuts its key interest rate. The Bank of Canada is also considering similar action.

If the Australian Dollar is going to go up, it will be because of the weak U.S. Dollar and the strong U.S. Dollar’s impact on Canada. This will help the Australian Dollar to appreciate against the Canadian Dollar in comparison to the other major currencies.

If the U.S. Federal Reserve raises its borrowing costs to prevent the unemployment rate from increasing, that could also negatively affect the Australian Dollar. Inflation is the main concern of the Federal Reserve when they are considering a tightening of monetary policy. When inflation rises, the price of goods and services goes up, which means that the deficit is increased. The higher the deficit, the higher the inflation.

The weak real estate market in Australia is the main reason behind this. If the U.S. Dollar rises on the U.S. Federal Reserve’s next meeting, then the Australian dollar could go up.

If the U.S. Dollar stays low, then this may cause the Bank of Canada to raise its borrowing costs to counteract the drop in the U.S. Dollar, which could put further pressure on the Canadian economy. There is a very high degree of economic uncertainty around the world, with many governments facing tough decisions on where to invest their money, and how to reduce deficits.

The Bank of Canada will need to determine whether it will raise interest rates to support the Canadian dollar or whether the U.S. Dollar will continue to fall against the Canadian dollar. Should the Bank of Canada to raise interest rates, this will lead to lower borrowing costs, which will put pressure on the Canadian banks, and lead to tighter lending standards. {and tighter lending practices for consumers. In turn this can lead to higher interest rates, which will also lead to a stronger dollar.

Should the Australian Dollar rise on the U.S. Federal Reserve’s next meeting, this would be a positive for the Australian Dollar and this would strengthen its position against the Canadian Dollar because of the stronger risk appetite that this implies. Should the Australian Dollar rise on the Bank of Canada’s next meeting, this would lead to lower lending standards and lower rates for borrowers in Canada. Both these actions will help the Australian Dollar appreciate against the Canadian Dollar, because of the strength of risk appetite, and also because of the stronger economic outlook of the Bank of Canada.