Australian Dollar US Dollar (AUD/USD) Exchange Rate Volatile after Huawei CFO Arrest

AUD/USD Exchange Rate Volatile as Australian Construction Slips to Weakest Levels in Over Three Years

The Australian Dollar US Dollar (AUD/USD) exchange rate has remained volatile over the past day, making some attempts to claw back losses after spending the week falling.

The pairing is currently trading at a rate of $0.7221.

The Australian Industry Group released their performance of construction index for November, which showed a slip in figures from 46.4 to 44.5, which is the weakest result since February 2015.

US factory orders for October slid further than expected yesterday, from 0.2% down to -2.1%, adding to the volatility within the pairing.

AUD/USD Exchange Rate Plummets during This Week’s Session as Fresh US-China Tensions

The US-China tension being revisited so soon after a supposed thaw and truce agreement weakened the Chinese Yuan, while a slip in stock and commodity prices all did little to aid the Australian Dollar during the session on Thursday.

Midway through the session the news broke that Chinese tech giant Huawei’s CFO, Meng Wanzhou, had been arrested in Canada, and is facing extradition to the USA.

This had the immediate effect of hitting risk-correlated currencies, including the Australian Dollar.

Thursday saw the release of October’s retail sales figures for Australia, which saw a greater-than-expected rise to 0.3% from a previous 0.1%, although this could do little to stop the ‘Aussie’ slip against the US Dollar.

A speech from the Assistant Governor of the Reserve Bank of Australia (RBA) Guy Debelle, likely did little to help AUD as he said the RBA still has policy flexibility to support economic activity if needed.

AUD/USD Exchange Rate in Steady Decline This Week on Back of Strong US Figures

Thursday saw the release of US unemployment figures, showing that there had been a higher-than-predicted drop in continuing jobless claims for 23 November, falling to 1.631M from 1.705M.

The Markit US services PMI was also released not long after, reporting a rise to 54.7 for November despite a forecast suggesting the figure would remain steady at 54.4, giving the ‘Greenback’ help in rallying against AUD.

The release of the ISM non-manufacturing PMI for November also showed growth for Australia, despite a forecast decline, rising from 60.3 to 60.7.

AUD/USD Exchange Rate Outlook: Will the Australian Dollar Fall Further Against the US Dollar?

Movement in the pairing over the course of today’s session is likely to be a result of upcoming US data releases, as further unemployment data suggests that October’s rate of 3.7% is likely to have remained steady throughout November.

US average hourly earnings are also set to be released, which are predicted to remain steady at a rate of 3.1% in November compared to last year, although if this figure deviates significantly it is likely it will cause movement for the ‘Greenback’.

The average hourly earnings compared to the previous month is forecast to increase from 0.2% to 0.3%, and if this happens it is likely the USD is likely to continue holding the upper hand over AUD.

Hannah Wilson

Contact Hannah Wilson