Higher Crude Prices keep AUD/USD Exchange Rate Positive
The Australian Dollar (AUD) has firmed against the US Dollar (USD) today, following the news that oil prices have risen.
The spike in WTI crude oil prices was attributed to US President Donald Trump’s decision to withdraw the US from the Iran nuclear deal.
Summarising the situation, Rodrigo Catril of National Australia Bank (NAB) said:
‘After yesterday’s decision by President Trump to pull out of the Iranian nuclear deal and reinstate sanctions on Iran, oil prices embarked on a steady rise.
‘The surge in crude prices helped to lift stocks as well as the LNG-linked Australian Dollar.’
Australian Budget Analysis Pushes AUD/USD Exchange Rate Higher
The 2018 Australian Federal Budget didn’t receive a unanimous welcome earlier this week, but after being dissected by economists the plans have supported AUD/USD exchange rates.
As well as tax cuts for low and middle-income earners, the tax plans also include measures to improve Australia’s roads and railways and embark on an ambitious space programme.
US Dollar to Australian Dollar (USD/AUD) Exchange Rate Drops after Dovish Fed Speech
Over in the US, the US Dollar (USD) to Australian Dollar (AUD) exchange rate has dipped following cautious remarks from a Federal Reserve policymaker.
Raphael Bostic, President of the Fed Bank of Atlanta, has warned that fears of a trade war could be draining US business investment.
The threat of a US-China economic conflict has been out of the headlines recently, but still remains a background concern for USD traders.
Australian Dollar to US Dollar (AUD/USD) Exchange Rate Losses Forecast if US Inflation Rises
The week’s last remaining AU data may not have much impact on the Australian Dollar (AUD) today, leaving the US Dollar (USD) as the dominant force before the weekend.
US inflation rate data will be released this afternoon, followed by a consumer confidence reading on Friday.
The AUD/USD exchange rate could drop sharply if this afternoon’s data shows higher inflation, given that this might trigger a US Dollar rally.
Higher inflation increases the chances of the Federal Reserve raising US interest rates in the near-future, as a way of reducing the effects of inflationary pressures on US households.
Friday’s US confidence data may trigger a brief USD decline if it prints as predicted; a dip in the confidence index from 98.8 points to 98.5 is forecast.
Looking further ahead, the Australian Dollar may regain any lost ground on Tuesday when Reserve Bank of Australia (RBA) meeting minutes come out.
These may reveal positive economic forecasts among RBA policymakers that could raise confidence among AUD traders.