The AUD/USD rate failed to rally due to news of iron ore costs dropping for the third day in a row on Tuesday, putting prices at their lowest level since 3 January.
This has been blamed on lower Chinese demand for iron ore, with the country’s ports reportedly operating at a high capacity, thus reducing demand for raw materials from Australia.
Summarising the difficulties for Australian exporters, ANZ Bank Commodities Analyst Daniel Hynes said:
‘A combination of a harsh winter in China and plentiful inventories at the ports is reducing traders’ appetite in the spot physical market.’
AUD/USD Exchange Rate Unchanged by Four-Year High In Consumer Confidence
The Australian Dollar has failed to make a clear advance over the US Dollar recently, despite positive Westpac consumer confidence figures.
This index rose from 103.3 points to 105.1, indicating optimistic responses outweigh pessimistic ones.
Commenting on the results, which showed a four-year high for the reading, Westpac Senior Economist Matthew Hassan said:
‘Sentiment has continued to recover from the weakness seen in the September quarter last year, bolstered by a less threatening outlook for interest rates and improving confidence around the economy and jobs.’
While rising confidence is good news, the small scale of the increase suggests it will result in no immediate economic boost, with Hassan adding:
‘Some of the survey details suggest there’s still some lingering weakness, particularly around family finances, that is likely to see consumers still quite restrained.’
US Dollar to Australian Dollar Exchange Rate Weakened by NAFTA Warning
In a relatively quiet week for US Dollar trading, the USD/AUD exchange rate has dipped on a negative forecast about the consequences of abandoning NAFTA.
The North American Free Trade Agreement (NAFTA) has long been a target of Donald Trump, who is currently in the process of renegotiating the deal.
Oxford Economics hasn’t been positive about the potential outcomes for tearing up the deal, estimating 300,000 job losses and slower economic growth.
Talks began in 2017 and will continue this year, but it remains to be seen if Trump will take decisive action on the matter in the coming months.
Australian Dollar to US Dollar Forecast: AUD/USD Advance Possible on Employment Data
The Australian Dollar could rise sharply against the US Dollar on 18 January, if AU employment rises by more than forecast.
Current estimates are for a rise in the number of employed people during December, but no change in the unemployment rate, which currently stands at 5.4%.
For US Dollar traders, the next notable news will come a day later on 19 January.
This will be the University of Michigan’s preliminary consumer confidence reading, which is tipped to show growing optimism during January.
If these forecasts prove accurate, the US Dollar could advance against the Australian Dollar.