Australian Dollar US Dollar (AUD/USD) Exchange Rate Rises as ‘Greenback’ Hit by Risk-On Sentiment

AUD/USD Exchange Rate Rises as US-China Trade Discussions Show Progress

The Australian Dollar US Dollar (AUD/USD) exchange rate is up today and is currently trading within the region of USD$0.7185.

The Australian Dollar (AUD) has managed to recover against the US Dollar (USD) today despite yesterday’s disappointing Australian year-on-year building permits figures for November plummeting -32.8%, to a five-year low.

These losses were muted, however, by the risk-sensitive Australian Dollar being buoyed by continuing optimism over the US and China trade negotiations.

This came after the spokesman for China’s Commerce Ministry, Gao Feng, commented yesterday that the meeting between US President Donald Trump and Chinese President Xi Jinping, was positively progressing over structural issues.

Australia US Dollar (AUD/USD) Exchange Rate Rises Despite Signs of Slowing Chinese Economy

The Australian Dollar (AUD) was left unmoved by today’s signs of a slowing Chinese economy, however, with today’s release of China’s year-on-year PPI figures for December falling by 0.9%.

Raymond Yeung and Betty Wang, member of China’s economics team for ANZ Bank, commented that ‘sliding producer prices and falling growth momentum tend to move in tandem.’

Australian Dollar traders, meanwhile, will be awaiting today’s release of the AiG performance of construction index figures for December, with any signs of an increase likely bolstering sentiment for the ‘Aussie’.

USD/AUD Exchange Rate Dips as Investors Flee for Higher-Yielding Currencies

The US Dollar (USD) was left unmoved by the publication of today’s US continuing jobless claims figures for December, which showed an above forecast decrease to 1.722m against November’s 1.75m.

These were also followed by the US initial jobless claims figures for January, which showed a better-than-expected decrease to 216k against last month’s 233k.

US Dollar investors, however, will be looking ahead to the speech later on by the Chair of the Federal Reserve, Jerome Powell, with any bullish comments potentially enabling the US Dollar to recover some of its losses.

The US Dollar is generally suffering today as investors have pulled out of the ‘Greenback’ safe-haven and sought riskier currencies where yields are higher, which has caused the Dollar to fall to its lowest level since October.

Yesterday saw the release of the FOMC minutes for December which showed that the Federal Reserve was going to take a ‘patient’ approach rather than a ‘passive’ one in 2019, signalling a dovish outlook for the US economy and causing some ‘Greenback’ investors to sell.

USD/AUD Forecast: Australian Dollar to Remain on Top After Weak US Data?

‘Aussie’ investors will be looking ahead to tomorrow’s publication of the seasonally-adjusted retail sales figures for November, with any signs of an increase likely benefitting the Australian Dollar.

However, the Australian Dollar could weaken against the ‘Greenback’ tomorrow with the US seeing a slew of important data releases.

The US Dollar could gain ground on the ‘Aussie’ if the publication of tomorrow’s US consumer price index figures for December show an increase.

These will, however, be followed by the release of the US monthly budget statement for December which is expected to be bearish, and may further encourage the AUD/USD exchange rate to rise.

John Cameron

John studied economics at Cambridge University and later became an MSTA qualified Technical Analyst. He began working for TorFX almost a decade ago and now holds a Senior Account Manager position. As well as lending his clients support and guidance, John has produced market commentary and detailed exchange rate analysis for a number of online publications.

Contact John Cameron