Australian Dollar US Dollar (AUD/USD) Exchange Rate Muted on Pakistan’s ‘Peace Gesture’
UPDATE: The Australian Dollar US Dollar (AUD/USD) exchange rate continued to remain muted today following the Trump-Kim summit in Hanoi.
The pairing is currently trading at an inter-bank rate of $0.7140.
Reports emerged this afternoon that Prime Minister of Pakistan, Imran Khan said that on Friday Pakistan will release a captured Indian pilot as a ‘peace gesture’.
Prime Minister Khan revealed his decision during a speech, in which he said Pakistan was focused on de-escalation.
This likely gave the risk-sensitive ‘Aussie’ a boost as it signals an easing of relations following the dogfight in the Himalayan foothills, the first publicly acknowledged spat between the two nations for 48 years.
Australian Dollar US Dollar (AUD/USD) Exchange Rate Slips as Trump-Kim Summit Hits Impasse after Sanction Demands
The Australian Dollar US Dollar (AUD/USD) exchange rate slipped today and is currently trading at an inter-bank rate of $0.7132.
Heightened geopolitical risks weighed on the risk-sensitive Australian Dollar (AUD) this morning after reports revealed that the summit held in Hanoi between US President Donald Trump and North Korean Leader Kim Jong-un had broken down over sanctions demands.
It was expected that the pair would be announcing progress on denuclearisation, although this was not the case, with Trump stating:
‘Sometimes you have to walk and this was one of those times.’
The two leaders did indeed walk away from the summit with no agreement set in place as the US could not meet Kim’s sanctions demands.
Speaking to reporters, President Trump stated:
‘It was all about the sanctions. They wanted the sanctions lifted in their entirety and we couldn’t do that.’
The original schedule had included for a working lunch for the two leaders and a ‘Joint Agreement Signing Ceremony’, however this was promptly cancelled, with Mr Trump leaving Vietnam.
Australian Dollar (AUD) Slides as Hopes for US-China Breakthrough Dampened
Remaining in the Asia Pacific region, cautious remarks from US Trade Representative Robert Lighthizer about the progress in US-China negotiations weighed heavy on the ‘Aussie’.
Casting doubt on the prospect of a major breakthrough in the near-term, Lighthizer said:
‘Much still needs to be done, both before an agreement is reached, and more importantly, after it is reached.’
This contrasts earlier reports from President Trump who tweeted that a trade deal with China was in ‘advanced stages’.
Added to this, sentiment for the risk-sensitive Australian Dollar (AUD) was further dampened by poor Chinese data.
Activity across the manufacturing sector in China deteriorated at the fastest pace in nearly three years.
China’s NBS Manufacturing PMI slipped further below 50 to 49.2 in February signalling contraction of the sector
AUD/USD Outlook: Will the US Dollar Slide if GDP Misses 3% Target?
The Australian Dollar US Dollar (AUD/USD) exchange rate could rise following the release of the US GDP for Q4 2018 as it is likely to fall short of the Trump administration’s stated 3% target.
It is suggested that the US economy is likely to show that it has slowed due to weak exports and softer consumer spending.
This evening the AiG Performance of Mfg Index is due for release, and if manufacturing growth rises the ‘Aussie’ (AUD) could receive an upswing of support.
US retail sales figures for January are going to be released at the end of this week’s session which could cause movement in the pairing.
If sales contract once again in January, it could dampen sentiment for the US Dollar (USD).
Also likely to weigh on the ‘Greenback’ will be the ISM manufacturing PMI for February as forecasts suggest growth has slowed.
If the PMI slips from 56.6 to 56.2 or further than forecast, the Australian Dollar to US Dollar (AUD/USD) exchange rate could rise.