Over the past week, the Australian Dollar to US Dollar (AUD/USD) exchange rate was trending within the range of 0.7400 to 0.7727.
With the situation in Greece reaching boiling point, the Australian Dollar softened versus many of its peers as a result of dampened demand for high-yielding assets. Lack of confidence and safe-haven demand also reaches beyond the currency market, with commodity prices bearish in response to heightened uncertainty in Europe. Gold and iron ore price have dropped to fresh lows over the past week, which has weighed heavily on demand for the Australian Dollar.
In contrast, the generally damp market sentiment has caused the US Dollar to strengthen despite the US publishing some less-than-ideal ecostats. The general appreciation of the ‘Greenback’ (USD) is bad news for the Federal Reserve. In the past few meetings, the Federal Open Market Committee (FOMC) has stated that one of the biggest stumbling blocks preventing a benchmark rate increase is the high value of the North American asset.
The Australian Dollar to US Dollar (AUD/USD) exchange rate is currently trending in the region of 0.7428.
On Tuesday, the Australian Dollar continues to trend lower as a result of geopolitics in Europe. After the latest Eurogroup meeting saw no progress made, and with time rapidly running out for the Hellenic nation, market sentiment is unlikely to recover until a decision is made regarding Greece’s future in the Eurozone. Oil prices, gold prices and iron ore prices have all declined significantly which adds additional ‘Aussie’ (AUD) headwinds. The Australian asset did advance during the Australasian session after the Reserve Bank of Australia (RBA) opted to hold the cash rate. The appreciation was short-lived, however, after Governor Glenn Stevens stated that he expects the Australian Dollar to naturally devalue into 2016.
The US Dollar rallied on Tuesday amid continued demand for safe-haven assets. US data produced relatively positive results with the trade deficit widening by less-than-expected in May. The continued Dollar appreciation is likely to significantly delay a benchmark rate increase, however.
Looking ahead, the Australian Dollar to US Dollar (AUD/USD) exchange rate is unlikely to be significantly altered by domestic data as the situation in Greece continues weighing on trader risk-appetite. With that being said, the Federal Reserve minutes from the June 16
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policy meeting could have a significant impact on the currency market. Also, Australian Employment Change and Unemployment Rate have enough economic weighting to provoke ‘Aussie’ volatility.
The Australian Dollar to US Dollar (AUD/USD) exchange rate was trending within the range of 0.7393 to 0.7499 during Tuesday’s European session.