The stronger-than-expected US inflation figures may have given the ‘Greenback’ a modest boost on Tuesday, but the Australian Dollar to US Dollar (AUD/USD) exchange rate resumed its uptrend during the local session.
Speculation that the Federal Reserve might delay the raising of borrowing costs until September of this year allowed the ‘Aussie’ to achieve a high of 0.7891 and trade in the region of its strongest level for two-months against its US peer.
The Reserve Bank of Australia’s (RBA) Financial Stability Report had little impact on the Australian Dollar as rather than bringing up fresh concerns, the RBA reiterated previous remarks regarding the risks posed by the Australian housing market.
The central bank stated; ‘Regulators will consider whether additional steps are needed depending upon the evolution of risks in the housing and mortgage markets in the period ahead. […] Few of the largest real estate firms and property developers that have issued foreign-currency denominated debt appear to derive foreign currency revenue and the burden of servicing this debt could increase as interest rates rise in the United States and/or if the Chinese Renminbi were to depreciate.’
The AUD/USD currency pair largely held gains into the European session and remained trading in the region of 0.7877.
A disappointing US Durable Goods Orders report led the Australian Dollar to post additional gains as Wednesday progressed.
Economists had anticipated an orders increase of 0.2% in February. However, orders actually tumbled by -1.4% following a negatively revised gain of 2.0% in January.
The data saw the US Dollar soften across the board.
As the week continues, notable Australian reports are in short supply so further AUD/USD volatility is likely to be triggered by US data, including Thursday’s initial jobless/continuing claims numbers and Markit’s Services/Composite PMIs.
On Friday the US reports to be aware of include the nation’s annualised fourth quarter growth data, personal consumption figures and the final University of Michigan Confidence index for March. Economists are predicting a positive revision from 91.2 to 92.0.
Any ecostats which increase the odds of a June interest rate increase from the Federal Reserve could push the Australian Dollar to US Dollar (AUD/USD) exchange rate lower before the weekend.
Australian data will be more influential next week, with the nation set to publish its AiG Performance of Manufacturing Index, Building Approvals numbers and Trade Balance stats.