Australian Dollar US Dollar (AUD/USD) Exchange Rate Rangebound on Signs of Slowing Chinese Economy

AUD/USD Exchange Rate Steady over Fears of Slowing Chinese Economy

The Australian Dollar US Dollar (AUD/USD) exchange rate is steady today and is currently trading at a rate of $0.7199 on the inter-bank market.

The Australian Dollar (AUD) remained static against the US Dollar (USD) with the on-going partial US government shutdown dampening sentiment in US markets.

However, traders in the Australian Dollar are becoming increasingly concerned over signs of China’s economic slowdown, following the release of Chinese imports and exports figures – with exports facing their biggest slide in at least two years.

Ray Attrill, the Head of FX Strategy at National Australia Bank, commented:

‘The decline in exports is seen to be symptomatic of weaker global demand that transcends the impact of US tariffs. . . Weaker imports, meanwhile, are viewed as evidence of an even sharper slowdown in China’s economy.’

With China being Australia’s biggest trading partner, any signs of a slowing Chinese economy will significantly affect the value of the Australian Dollar.

US Dollar investors, meanwhile, will be looking ahead to today’s US data releases, with the most important being the publication of the yearly US PPI figures – excluding food and energy – for December, which are expected to remain static.

USD/AUD Exchange Rate Rangebound as US Government Shutdown Hits Economy

Some analysts suggest the US Dollar is being held down due to fears over the US economy, with President Donald Trump having previously said that the shutdown could last for ‘months’, with economists predicting this could even see the US economy contract in the first quarter.

Ian Shepherdson, a Chief Economist at Pantheon Macroeconomics, commented:

‘We have no way of estimating the impact on government contractors, or the second round effects when those businesses fail, or have to delay paying their employees, subcontractors, suppliers, and creditors, but it will not be trivial.’

The partial US government shutdown is also limiting the release of economic data – with any publications from the Commerce Department temporarily put on hold – as the divide between the White House and the House of Representatives continues over Trump’s demand for funding for the Mexican border wall.

AUD/USD Outlook: ‘Aussie’ Could Gain on Signs of Recovering Chinese Economy

AUD investors will be looking ahead to tomorrow’s publication of China’s yearly foreign direct investment figure for December, which is expected to increase, potentially buoying the ‘Aussie’ on signs of a recovering Chinese economy.

Tomorrow will also see the release of Australia’s Westpac Consumer Confidence figures for January, with any signs of an increase benefiting the Australian Dollar.

USD, meanwhile, may further weaken tomorrow if the publication of the US retail sales figures – excluding automobile sales – decreases.

Looking further ahead to Thursday, Australia will see a raft of data releases, with the most important being Australia’s home loans figures for November which are expected to decrease – potentially weakening the AUD/USD exchange rate.

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