The Reserve Bank of Australia late last night kept the Interest Rate at 1.5% however analysts believe it will not remain at this level much longer.

The Australian Dollar has arguably been artificially strong over the last year with all the uncertainty around the world. This could come to an end as the RBA might have to cut the interest rate as the inflation level remains low. The Australian economy has just managed to avoid a recession following previous drops in the GDP level over the last few quarters.

If there was to be an interest rate cut that would cause the Aussie Dollar to suffer sharp losses in a very short space of time. Considering this time last year, the GBP/AUD exchange rate was around the 2.20 level, the room for losses is quite significant.

Imminent US Rate Hike

It would appear to be a forgone conclusion that the Federal reserve will raise US interest rates next week on the 15th March. The rate hike could have a significant effect on the Australian Dollar and if there were to be several rate hikes in the US then the currency could drastically weaken. The future strength for the Aussie Dollar looks under threat from both internal and external factors.

Quiet end to the week

The only data expected from Australia to end the week is homes lending data on Friday morning, other than this there is no data. The US jobs data at the end of this week will be key and could clearly emphasise the US rate hike is coming next week, should that be the case then there could be AUD movement as soon as Friday.