Australian Dollar US Dollar Exchange Rate Update: AUD/USD Trading Narrowly Following Sharp Drop in Australian Exports
The Australian Dollar to US Dollar (AUD/USD) exchange rate continues to trend in a narrow range this afternoon as the ‘Aussie’ remains hindered by a worrying drop in Australian exports in April.
Meanwhile the US Dollar (USD) continues to struggle this afternoon as a resurgent Euro (EUR), siphons demand for the US currency.
Australian Dollar US Dollar (AUD/USD) Exchange Rate Flat as Australian Exports Plummet
The Australian Dollar to US Dollar (AUD/USD) exchange rate is trading narrowly this morning as Australia’s latest trade balance disappointed markets.
At the time of writing the AUD/USD exchange rate is trading close to today’s opening rate, but is about 0.2% lower than Wednesday’s best levels.
Australian Dollar US Dollar (AUD/USD) Exchange Rate Steadies as Australian Exports Tumble
The Australian Dollar (AUD) is currently holding close to a six-week high against the US Dollar (USD) as some upbeat domestic GDP figures as well as a broad based fall in USD helps to buoy the AUD/USD pairing.
However the ‘Aussie’ is struggling to push any higher this morning following the release of Australia’s latest trade balance figures.
According to data published by the Australian Bureau of Statistics (ABS), the trade surplus narrowed from AU$1.73bn to AU$0.97bn in April.
While this was only slightly below expectations of an AU$0.98bn surplus, the revelation of a sharp fall in exports appeared to drag on AUD sentiment.
After striking a record high of AU$34.95bn in March, today’s data revealed exports fell by 2% to AU$34.18bn in April.
This downtrend in exports was attributed to weaker exports of metals, particularly iron ore, as production curbs in Chinese steel mills at the start of the second quarter hampered demand.
US Dollar (USD) Dominance Close to an End?
The US Dollar (USD) has rocketed higher on currency markets over the past couple of months, however analysts are now beginning to forecast that it’s time in the limelight may be drawing to an end.
A Reuters poll, revealed around two-thirds of analysts believe the huge demand for the US Dollar will peter out within three months, while 20% suggest this could happen with a month.
Daniel Hui, Executive Director of global FX strategy at JP Morgan said:
‘We find it premature to crown the dollar king and extrapolate continued broad USD strength into and through the second half of the year.’
However with the US economic outlook appearing bright and US political uncertainty beginning to fade, it may still be a little premature to bet against the US Dollar just yet.
AUD/USD Exchange Rate Forecast: US Dollar Gains from Fed Rate Hike to Be Limited
Looking ahead, a quiet end to the week is likely to prompt investors to turn their attention to next week’s session as markets brace for the Federal Reserve’s latest policy meeting.
While a rate hike from the Fed looks like a forgone conclusion the US Dollar’s (USD) gains from the decision may prove to be limited, with the currency’s surge in May leaving very little headroom to advance further, especially as the majority of investors have already priced in the move.
Also likely to drive movement in the Australian Dollar to US Dollar (AUD/USD) exchange rate next week will be the release of Australia’s latest labour report.
This could see the AUD strengthen in the second half of the week if unemployment falls in line with forecasts.