Still dealing with the consequences of last week’s abysmal NFP figures, the Australian Dollar to US Dollar exchange rate climbed steadily over the start of the week.
Opening to a small spike on Monday morning, the AUD/USD rate gradually climbed from a low-point of 0.7319 to today’s high of 0.7475.
AUD/USD sat at 0.7469 at the time of writing.
Aussie Boosted by Disastrous US NFP Figures
The safe-haven US Dollar saw massive depreciation across the board last week following the publication of an abysmal US non-farm payrolls report.
Said report is an indicator of new non-farm jobs within the US economy. The report was forecast to show 160,000 new jobs, yet actual figures tell us that only 38,000 new jobs were created.
Obviously this came as a massive shock to investors, as they spurned away from the now-weakened US Dollar towards more lucrative risk-correlated currencies like the ‘Aussie’.
Reserve Bank of Australia Leaves Rates Untouched
The central bank’s decision not to cut rates came as a welcome relief for traders with eyes for the Australian Dollar.
With sector PMIs showing areas growing their way out of contraction and the trade deficit lessening, Australia’s reserve bank opted to hold off on any benchmark rate cuts, wanting to stay far away from any possible hamstringing of this fledgling recovery.
All this together afforded the ‘Aussie’ Dollar a 1.1% increase against the ‘Greenback’ last week, an increase it has managed to cling to.
Chairwoman Yellen Puts Investors on Cautious Footing
Bearish comments from Federal Reserve Chairwoman Janet Yellen saw investors adopt a cautious outlook on Monday.
Yellen’s remarks indicated next-to-no chance of a Fed rate hike in June as disappointing NFP data and low consumer confidence pushed a rate hike back to July at the earliest.
More investors are eying up the money-making potential of the AUD as the US Dollar struggles to find its feet after the NFP gut-blow.
What Next for AUD/USD?
In the US, Michigan University’s consumer confidence report is set to be released towards the end of the week.
Analysts regard it as a reliable indicator of general consumer confidence, meaning if we see a large boost in the figure it may bode well for the US Dollar. Other marginally important reports are set to release later in week but any drastic impact is unlikely unless the figures greatly defy expectations, be that in a negative or positive fashion.
The only Australian ecostat of note for the week was released earlier today. Investment lending fell to -5.0% prompting a small dip in the ‘Aussie’ Dollar, causing concerns of a lack of investor confidence within the Australian economy.
Risk sentiment and US reports are likely to drive AUD/USD movement for the rest of the week.