Australian Dollar to US Dollar Exchange Rate Fails to Benefit from US-China Trade Hopes
Despite rising hopes that the US and China are edging closer to a resolution on trade disputes that dominated headlines throughout 2018, the Australian Dollar to US Dollar (AUD/USD) exchange rate has been tumbling.
The relatively risky trade-correlated Australian Dollar (AUD) typically benefits strongly from optimistic Chinese trade news, but AUD/USD has been falling as investors digest the latest meeting minutes from the Reserve Bank of Australia (RBA).
The Reserve Bank of Australia was less cautious than expected in its most recent policy decision, with RBA Governor Philip Lowe following up with a more cautious and neutral stance. The minutes reasserted this neutral stance, leaving the ‘Aussie’ weaker.
As a result, the US Dollar (USD), benefitting from a brief break in the risk-rally and weakness in its rivals, pushed AUD/USD lower.
Australian Dollar (AUD) Exchange Rates Tumble on Reserve Bank of Australia (RBA) Report
Tuesday’s Asian session saw the publication of the Reserve Bank of Australia’s (RBA) latest meeting minutes report.
While the RBA initially appeared less cautious than expected in its meeting, the minutes fell more in line with the cautious, neutral stance taken by officials since then.
RBA officials have ramped up concerns about falling Australian housing prices, Chinese growth, and global issues like US-China trade tensions and the slowing global growth outlook.
The bank took a more neutral stance in its meeting minutes and indicated that monetary policy could move in either direction.
This slightly more dovish stance drove the Australian Dollar (AUD) lower today, despite further signs that the US and China were closing in on a potential agreement regarding trade tensions.
As Australia is a trade-heavy nation and the Australian Dollar is often influenced by trade sentiment, this news would typically bolster Australian Dollar demand.
US Dollar (USD) Exchange Rates Rebound after President’s Day
US markets were closed on Monday, as the nation observed the President’s Day bank holiday.
During this session, investors sold the US Dollar (USD) due to a combination of factors including higher risk sentiment and recent mixed US data.
However, the US Dollar rebounded today and began to regain some of last week’s losses versus a weaker Australian Dollar (AUD).
As well as Australian Dollar weakness, the US Dollar is benefitting from weakness in other rivals like the Euro (EUR).
The Euro is the US Dollar’s biggest rival and the two currencies have a negative correlation, so Eurozone economic jitters is keeping the US Dollar appealing.
Australian Dollar to US Dollar AUD/USD) Exchange Rate Investors Anticipate Australian Job Stats
For Australian Dollar to US Dollar (AUD/USD) exchange rate investors, the week is just beginning as there is a slew of influential data and news due in the coming sessions.
The Australian Dollar (AUD) has been weakened by concerns of a more dovish Reserve Bank of Australia (RBA), but RBA interest rate cut fears could lighten a little if Australian data beats expectations.
Australian job market data will be in focus for ‘Aussie’ investors this week, with Australian wage price stats from Q4 due on Wednesday and January’s unemployment rate and job change stats coming in on Thursday.
If Australian wages or the strength of Australia’s job market are better than forecast, AUD/USD could advance slightly and avoid shedding more of last week’s gains.
The US Dollar (USD), on the other hand, could be influenced by the Federal Reserve’s latest meeting minutes, due for publication on Wednesday evening.
If the Fed’s tone shifts again due to global growth jitters and mixed US data, the US Dollar could weaken. Upcoming developments in US-China trade negotiations could also be influential for the Australian Dollar to US Dollar (AUD/USD) exchange rate.