The Australian Dollar to US Dollar (AUD/USD) exchange rate surged by over 1.2% on Thursday as Aussie jobs data impressed and US retail sales numbers fell flat.
The AUD/USD pairing had previously sunk to a fresh six-year low on bets that the Reserve Bank of Australia (RBA) will need to combat domestic weaknesses at home and abroad by cutting interest rates to a new record low.
Data from both Australia and China (Australia’s main trading partner) weighed on the South Pacific asset, and the AUD/USD exchange rate sank to a low of 0.7563 on Wednesday 11th.
However, before the close of the week the ‘Aussie’ staged a rebound, thanks (in part) to stronger-than-anticipated employment figures.
Although analysts are still envisaging the Australian unemployment rate rising to 7% by the end of the year, the level of joblessness eased from 6.4% to 6.3% in February after the Australian economy added 15,600 positions.
While this was only 600 more positions than anticipated, the slip in the nation’s participation rate was the primary reason for the decline in joblessness.
The Australian Dollar did manage to advance on a number of its peers after the data was issued and extended gains against the US Dollar following the publication of the US Advance Retail Sales report.
It was hoped that consumer spending would rebound in February after sales fell by -0.8% in January, but sales actually dropped by -0.6%.
Sales less autos registered a -0.1% decline.
As negative US ecostats might push back to timeline for the Federal Reserve’s first increase in borrowing costs, the data saw the US Dollar soften across the board.
Before the weekend further AUD/USD volatility could be caused by the University of Michigan Confidence gauge for March.
An improvement in sentiment, which has been predicted by economists, would be US Dollar supportive.
Next week the Australian Dollar is likely to experience movement as a result of the publication of minutes from the latest Reserve Bank of Australia (RBA) policy meeting.
If the minutes hint at a future negative rate revision, the ‘Aussie’ could tumble.
The other Australian ecostat to be aware of is the Westpac Leading Index. US reports and the Federal Open Market Committee meeting will also have an influence on the direction taken by the Australian Dollar to US Dollar exchange rate.
The Australian Dollar to US Dollar (AUD/USD) exchange rate achieved a high of 0.7731 during the European session.