Australian Dollar to US Dollar (AUD/USD) Exchange Rate Rips Higher as Commodities Prices Strengthen
The Australian Dollar to US Dollar (AUD/USD) exchange rate was able to make considerable gains overnight on Wednesday as the ‘Aussie’ was buoyed by rocketing commodity prices.
At the time of writing the AUD/USD exchange rate is up nearly 0.2% from its opening levels this morning, with the pairing striking a new one-month high.
Australian Dollar US Dollar (AUD/USD) Exchange Rate Jumps as Commodity Index Strikes Two-year High
The Australian Dollar (AUD) made considerable gains against the US Dollar (USD) during the Asian session earlier today as AUD sentiment was bolstered by a strong uptick in commodity prices.
The CRB commodity index, which measures prices for a basket of commodities leapt over 1% on Wednesday, reaching 201.88, its best levels since October 2015.
This in turn helped bolster the appeal of commodity-correlated currencies such as the Australian Dollar (AUD).
However the Australian Dollar’s (AUD) advance was not without its setbacks as the AUD/USD exchange rate suffered a brief sell-off following the release of Australia’s latest labour report.
The latest data published by the Australian Bureau of Statistics (ABS) revealed domestic employment only rose by 4,900 in March, falling well below forecasts that it would rise by 20,000 and leaving unemployment at 5.5%.
With employment growth appearing to slow and wages not expected to pick up until unemployment falls below at least 5% the data is unlikely to spur the Reserve Bank of Australia (RBA) into action anytime soon.
Rising US Treasury Yields Fail to Dent the Australian Dollar US Dollar (AUD/USD) Exchange Rate
At the same time while rising US treasury yields have lent support for the US Dollar (USD) against other currencies such as the Pound (GBP) and Euro (EUR) on underlying concerns over US-China trade have prevented it from staving off the Australian Dollar’s (AUD) advance.
Analysts suggest that despite the recent upside, markets are still not ready to fully commit to the US Dollar as they fear the possibility of Donald Trump ramping up his trade rhetoric once again.
Junichi Ishikawa, senior FX strategist at IG Securities in Tokyo said:
‘While the spreads between US yields and those in Japan and the euro zone continue to widen, the dollar cannot take full advantage due to lingering ‘Trump risk’.’
Australian Dollar US Dollar (AUD/USD) Exchange Rate Forecast: Fed Speeches to Lend Support to USD?
Looking ahead the Australian Dollar US Dollar (AUD/USD) exchange rate may be pressured during today’s session following a slew of speeches by Federal Reserve policymakers.
The speeches may prove to be supportive of the US Dollar (USD) if the consensus among policymakers suggests that the bank may still be open to the prospect of raising interest rates up to three additional times this year.
Meanwhile a lull in domestic data for the remainder of the week is likely to leave the Australian Dollar (AUD) vulnerable to further movements in the commodity markets.
This lack of data may also prompt AUD investors to turn their focus towards next week and the release of Australia’s latest CPI figures, with the AUD exchange rate likely to strengthen if inflation rose in the first quarter as forecast.
In the meantime, the Australian Dollar to US Dollar (AUD/USD) exchange rate is holding the considerable gains made overnight on Wednesday with the ‘Aussie’ being buoyed by those rocketing commodity prices.