Australian Dollar to US Dollar Exchange Rate Benefits from Trade Hopes and Central Bank Speculation
Despite slightly dampened Federal Reserve interest rate cut bets, the Australian Dollar to US Dollar (AUD/USD) exchange rate has continued to advance this week so far. The Australian Dollar (AUD) continues to rebound from its recent lows due to numerous factors.
Since hitting a post-January interbank low of 0.68 last week, AUD/USD has seen a solid rebound.
A lack of particularly supportive Australian news in recent sessions hasn’t stopped the pair from advancing past the interbank level of 0.89, and at the time of writing on Wednesday AUD/USD was trending near its best levels in a fortnight.
The Australian Dollar has been benefitting from a combination of hopes for positive developments in global trade tensions, while the US Dollar (USD) remains unappealing overall on persisting expectations for Federal Reserve interest rate cuts.
Australian Dollar (AUD) Exchange Rates Higher on Trade Speculation and Rival Movement
A lack of supportive Australian news in the last week has not prevented the Australian Dollar (AUD) from advancing versus a weaker US Dollar (USD), as the antipodean ‘Aussie’ benefits from other global factors.
The 2019 G20 Summit in Osaka will begin at the end of the week, and US President Donald Trump is expected to hold a meeting with China President Xi Jinping regarding the ongoing trade tensions between the nations.
Hopes for some kind of optimistic development in US-China trade tensions is keeping the Australian Dollar supported, and the currency has also been more appealing due to movements in rival currencies.
As the US Dollar’s (USD) appeal remains limited on Fed interest rate cut bets, the ‘Aussie’ has been more appealing in comparison.
On top of this, a less dovish than expected tone from the Reserve Bank of New Zealand (RBNZ) last night caused a surge in New Zealand Dollar (NZD) demand, which also bolstered Australian Dollar demand due to the correlation the currencies share.
US Dollar (USD) Exchange Rate Losses Slow as Fed Officials Dial Back Dovishness
The US Dollar (USD) has been one of the less appealing major currencies in recent weeks, as Federal Reserve interest rate cut bets rise and the Federal Reserve signals strongly that rates will be cut over the next year.
Due to the Fed’s dovish signals last week, combined with ramped up criticism of the bank’s high rates from US President Donald Trump, speculation had risen that the bank may be pressured to take aggressive easing measures.
As a result, when Fed Chairman Jerome Powell stressed the political independence of the bank in a speech last night, it doused market fears that the bank could be pressured by Trump’s demands for much lower rates.
This gave the US Dollar some limited support today, but Fed interest rate cut bets remain high and this week’s US data has been largely disappointing so far.
Australian Dollar to US Dollar (AUD/USD) Exchange Rate Investors Anticipate Major US Data
The US Dollar’s (USD) resilience has been limited this week, with Federal Reserve interest rate cut bets persisting enough to make it easier for AUD/USD to keep climbing.
This has been partially because the latest US ecostats have consistently fallen short of expectations, with manufacturing, house pricing and consumer confidence figures disappointing investors this week already.
With even more influential US ecostats due for publication in the coming sessions, US data and Fed bets will be the primary driver of the Australian Dollar to US Dollar exchange rate.
US durable goods orders data will be published this afternoon, followed by key US growth rate stats tomorrow, and Personal Consumption Expenditure (PCE) data on Friday.
If US growth disappoints investors as well tomorrow, Fed interest rate cut bets could rise further and the US Dollar would weaken.
Friday’s Australian private sector credit data, and of course the upcoming G20 Summit in Osaka, may also cause some Australian Dollar to US Dollar (AUD/USD) exchange rate movement.