Australian Dollar US Dollar (AUD/USD) Exchange Rate Up from 10-Year Low as Disappointing Data Weighs on USD

AUD/USD Exchange Rate Stabilises as Poor US Data Weighs Down the Dollar

The Australian Dollar US Dollar (AUD/USD) exchange rate has begun to stabilize after hitting a 10-year low earlier in the week, climbing back above the $0.70 benchmark and currently trading at inter-bank rates of $0.7032.

The Australian Dollar gains are largely the result of US Dollar weakness after worse-than-expected US ISM prices paid and ISM manufacturing PMI figures, which both dropped far below forecast.

The ISM prices paid report showed that business sentiment had fallen, denting the US Dollar in the process. The index fell from the previous 60.7 to 54.9, while the manufacturing PMI fell from 59.3 to 54.1 in December.

The Australian Dollar was also slightly boosted by positive figures released from China, as the Caixin services PMI edged up from 53.8 to 53.9 despite the predicted decline.

AUD/USD Exchange Rate Slides as AUD Suffers From Flash Crash

Yesterday saw the Australian Dollar fall to a 10-year low against the US Dollar, with AUD/USD hitting a low of $0.6850.

The slide, fueled by a weak manufacturing PMI released in China (Australia’s biggest trading partner) showed that factory activity had contracted for the first time in 19 months, as it fell from 50.2 to 49.7.

Adding more fuel to the fire was the announcement from Apple Inc that the company had suffered huge losses as a result of the trade tensions between the US and China, which caused their shares to fall by 7.45% and their value to fall by $55 billion.

This rare warning from the tech giant increased fears for the global economy, which pushed investors away from high risk currencies and towards safe-haven currencies such as USD.

Outlook: AUD/USD Exchange Rate to Fall Once More on Back of US Non-Farm Payroll Data?

Looking ahead to this afternoon, the release of the US non-farm payrolls is likely to have an impact on the Australian Dollar to US Dollar (AUD/USD) exchange rate, as the Dollar could push back against the ‘Aussie’ if today’s US employment data impresses.

The US is forecast to have added more positions in December than November, and the unemployment rate is expected to hold steady.

However, any US Dollar gains could be limited if average earnings decline as forecast.

With US-China trade tensions taking the headlines once again, it seems likely that any developments in talks between US President Donald Trump and Chinese President Xi Jinping will also inspire movement within the AUD/USD exchange rate.

The head of foreign exchange strategy of the National Australia Bank, Ray Attrill, has stated that the trade talks between the US and China were going to be the ‘single most important event risk’ for the AUD in the coming weeks.

Luke Trevail

Luke studied Journalism at university but quickly moved into the financial sector, initially working in retail banking before joining TorFX in 2007. As a Senior Account Manager Luke assists in overseeing the management of the company’s exposure to currency volatility. He uses his years of foreign exchange experience to produce regular news updates exploring the latest currency movements.

Contact Luke Trevail