OECD Predictions for 2018 RBA Interest Rate Hike Push AUD/USD Exchange Rate Higher
The Australian Dollar (AUD) has appreciated against the US Dollar (USD) today, rising to an exchange rate of $0.75.
This advance comes from an Organisation for Economic Cooperation and Development (OECD) economic forecast for Australia, which was broadly optimistic in its outlook.
OECD analysts believe that the Reserve Bank of Australia (RBA) could start raising interest rates by the end of 2018, stating:
‘Withdrawal of stimulus is projected to begin towards the end of 2018, as wage and price growth are expected to pick up further on account of a continued strengthening of activity and labour market performance.
‘The resulting boost to household incomes should mitigate risks associated with Australia’s very high household indebtedness.’
Mixed AU Investment Data Limits Australian Dollar to US Dollar (AUD/USD) Exchange Rate Gains
Less positively, elsewhere it has been revealed that Australian business investment in Q1 2018 missed forecasts due to reduced spending.
This news hasn’t caused Australian Dollar to US Dollar (AUD/USD) exchange rate losses, but has still put a ceiling on upward movement today.
Australian Bureau of Statistics (ABS) data has shown a 0.4% rise in investment, below the anticipated 0.7% level.
Other stats have been more supportive – spending on heavy industry has risen by 2.5% and a resurgent mining sector is expected to support the Australian economy going ahead.
US Dollar to Australian Dollar (USD/AUD) Exchange Rate Dips after GDP Slowdown
The US Dollar (USD) has slipped against the Australian Dollar (AUD) today, following the release of disappointing GDP data on Wednesday.
Second estimates for Q1 2018 showed a decline from 2.9% to 2.2%, below the expected 2.3% reading.
Despite this decline, economists are still predicting accelerating growth in the coming months, potentially up to the level of 3%.
Australian Dollar to US Dollar Exchange Rate Forecast: AUD/USD Losses ahead on US Jobs Data?
The Australian Dollar (AUD) may fall sharply against the US Dollar (USD) on Friday, when high-impact US jobs market data for May will come out.
This will cover changes to non-farm payrolls (measuring jobs added to the economy), as well as any shift in the unemployment rate.
The key payrolls reading is forecast to show an increase of 188k jobs, up from April’s 164k reading.
The jobless rate isn’t expected to change from 3.9%, but might still fall if more jobs are added than expected; this is possible as the payrolls reading is often volatile.
A large increase in payrolls and surprise drop in unemployment could boost the US Dollar (USD), pushing the Australian Dollar (AUD) down in the pairing.
Looking ahead to next week, the Australian Dollar could regain lost ground on Monday if higher retail sales are reported in April.
An increase in sales from 0% to 0.3% is predicted, which may be enough to increase the value of the Australian Dollar.