Over the past week, the Australian Dollar to US Dollar (AUD/USD) exchange rate was trending within the range of 0.7235 to 0.7396.
With commodity prices crashing and mounting fears regarding China’s economic slowdown, the Australian Dollar has generally softened versus its major peers. The latest slump in gold and iron ore prices have been of particular detriment to demand for the ‘Aussie’ (AUD) and Iron ore futures remain problematic. There have been some positive signs for the Australian economy, however. The recent Reserve Bank of Australia (RBA) policy easing has seen consumer confidence improve significantly, although business confidence remains subdued.
The US Dollar, meanwhile, has seen significant fluctuations over the past week. A general depreciation, however, can be attributed to the People’s Bank of China’s (PBoC) decision to devalue the Yuan. This led many traders to fear that the Federal Open Market Committee (FOMC) will not be willing to commit to a rate hike with so much uncertainty in China. In addition, the US asset fluctuated in response to varied results from domestic data publications.
The Australian Dollar to US Dollar (AUD/USD) exchange rate is currently trending in the region of 0.7337.
On Tuesday the Australian Dollar broadly declined as a result of continued anxieties regarding China’s economic struggles. The RBA published minutes from its most recent policy meeting on Tuesday but they were relatively optimistic, with RBA officials far more satisfied with current ‘Aussie’ levels. The central bank also acknowledged that the Oceanic currency could decline further and support the local economic recovery if we see a near-term Federal Reserve rate hike.
The US Dollar, meanwhile, is putting on a mixed performance in response to trader uncertainty and varied opinions as to the timing of a Federal Reserve rate hike. Most analysts have delayed hopes for a September rate increase given the recent developments in China. Tuesday’s US Building Permits and Housing Starts reports have the potential to provoke changes for the North American asset.
The Australian Dollar to US Dollar (AUD/USD) exchange rate dropped to a low of 0.7328 during Tuesday’s European session.
Looking ahead, influential Australian economic data is somewhat thin on the ground over the coming week. Wednesday’s Westpac Leading Index has the most weighting in terms of provoking ‘Aussie’ movement. With such a lack of influential data publications, the Australian Dollar will be subject to commodity prices, market sentiment, developments in China and US Dollar movement.
Conversely, there will be several influential US economic data publications to focus on over the coming week. Of particular significance will be minutes from the most recent FOMC meeting. Traders will scrutinise the minutes closely in an attempt to unlock clues as to the timing of a rate liftoff. The Consumer Price Index and Markit Manufacturing PMI will also be of significance to those invested in the ‘Greenback’ (USD).
The Australian Dollar to US Dollar (AUD/USD) exchange rate climbed to a high of 0.7386 during Tuesday’s European session.