Australian Business Confidence Reading Sees AUD/USD Exchange Rate Decline
The Australian Dollar (AUD) has fallen slightly against the US Dollar (USD) today, trading at a level of $0.74 on the interbank exchange rate.
This minor deterioration follows the news that the NAB business confidence index has ticked lower from 7 points in May to 6 points in June.
This still means that there are more optimistic companies than pessimistic ones, but when taken with NAB analysts’ comments the data has been unsupportive
Chinese Economic Slowdown Risk Drags AUD/USD Exchange Rate Lower
Another factor lowering Australian Dollar (AUD) trader confidence today has been the concern that China’s economy is taking a downturn.
Australia is a close economic partner of China, but a 2018 Chinese GDP slowdown could lead to a weaker Australian Dollar.
The concern is that with slower growth in the country, there will be less demand for Australian resources, in turn harming exporters.
US Dollar to Australian Dollar Exchange Rate Resilient Today
On the other side of the currency pairing, the US Dollar (USD) has made minor gains against the Australian Dollar (AUD) today, despite there being limited support for this advance.
The appreciation is mainly down to AUD weakness, as well as the hope that Thursday’s inflation rate figures could show significant growth.
A faster pace of inflation rate growth increases the chances that the Federal Reserve will decide to raise interest rates sooner rather than later.
Australian Dollar to US Dollar Exchange Rate Forecast: Will AUD/USD Losses Extend on Lower Confidence?
The Australian Dollar (AUD) might make further losses against the US Dollar (USD) in the near-term, when a consumer confidence measure comes out on Wednesday.
Westpac’s measure of consumer sentiment is predicted to show falling optimism during July, with a shift from 102.2 points to 100.
Such a decline could lead to AUD/USD exchange rate losses, as a 100-point reading means that neither optimism nor pessimism is prevalent among Australian consumers.
The US Dollar conversely has a chance to appreciate on Wednesday, if EIA crude oil readings show as-forecast declines in stock levels.
Lower reserves of crude oil can be beneficial to US oil exporters, who will be able to capitalise on increased prices.
Federal Reserve policymaker John Williams will also be speaking on Wednesday evening and could trigger additional US Dollar gains if he backs near-term interest rate hikes.