Forex Flash: AUD holding up despite commodities coming under pressure - BTMU

FXstreet.com (Barcelona) - Lee Hardman, FX analyst at the Bank of Tokyo Mitsubishi UFJ notes that the prices of commodities closely linked to China demand are coming under downward pressure with the price of copper, iron ore, and coal having all declined by around 10-20% from their recent highs in 2013.

He sees that the Australian dollar is continuing to hold up well so far with AUD/USD key support at around the 1.02 still not yet tested. He feels that the interest market in Australia is moving to discount another 0.50 point of RBA rate cuts over the next twelve months after such expectations were almost completely removed in mid-March. The next key focus for the RBA will be the release of the Australian inflation report for Q1 which is released tomorrow. Elsewhere, he notes that ongoing BoJ easing will likely continue to limit yen upside potential in the near-term.The BoJ are not expected to announce further asset purchases at this week’s meeting although may attempt to ease policy through influencing investors inflation expectations by revealing in their updated semi-annual Outlook report that they expect to reach the 2.0% inflation target by spring 2015.