The Australian Dollar to US Dollar exchange rate gained on Monday after sliding at the close of last week as a result of lacklustre Australian private sector credit data.
RBA Rate Cuts Unlikely? AUD May Gain Further
AUD looks to remain fairly strong for the foreseeable future thanks to rising commodity prices and a return to risk-on as investors look to profit from a period of stability in the US Dollar, as Hilary Clinton remains the favourite to win the US presidential elections
Coal prices have spiked over 150% this year as China has been forced to cut output while iron ore prices have also jumped 30%. These increases have helped boost the ‘Aussie’ despite worries over how sustainable these prices are.
With the Australian economy doing so well, analysts predict that new Reserve Bank of Australia (RBA) Chief Philip Lowe is unlikely to cut interest rates during Wednesday’s RBA meeting. Some analysts are even predicting that the current 1.5% rate will hold until around next May.
US Dollar (USD) Volatile Ahead of Presidential Election
The US has a few big domestic data releases this week with ISM manufacturing reports and unemployment data set to be released.
Most of the data is forecast to improve, supporting market bets of a December rate hike after Federal Reserve Chief Janet Yellen decided against a hike in September’s Fed meeting.
Most of the movement in the US Dollar over the next month is likely to be closely tied to the US elections as a perceived win for outsider Donald Trump could cause investors to flee to the US Dollar and other ‘safe haven’ currencies while they weather the storm.
AUD USD Forecast: Australian Dollar Uptick May Continue
As commodity prices remain high it looks likely the high-yield ‘Aussie’ will continue to make its slow rise against the US Dollar, especially while Clinton is perceived to be leading in the US elections.
Unless the trade bubble bursts or Trump becomes President, causing markets to become risk-adverse, it looks like there will be little to pressure the long-term uptrend of the Australian Dollar in any significant way.
That being said, the US Dollar may rise as traders ditch the Pound over recent ‘Brexit’ fears and flock to the ‘Greenback’ and its relative safety.