Australian Dollar to US Dollar Exchange Rate Steadies as Currencies Calm
While the Australian Dollar (AUD) was sold from its best levels in profit-taking at the beginning of the week, the Australian Dollar to US Dollar (AUD/USD) exchange rate has regained a good chunk of those losses due to various factors and Central Bank speculation.
AUD/USD remains well above last week’s opening levels. AUD/USD opened at the interbank level of 0.69 last week and closed closer to the level of 0.70.
While AUD/USD has dipped back into the region of 0.69 again this week, the pair has regained almost half of the losses seen yesterday and still trends much closer to the weekend’s 0.70 interbank level than last week’s levels.
Australian Dollar investors bought the currency again yesterday amid hopes that the Reserve Bank of Australia (RBA) would take a more cautiously neutral rather than dovish tone, but ‘Aussie’ gains slowed today as investors digested mixed Australian ecostats.
Australian Dollar (AUD) Exchange Rate Rebound Slows amid Mixed Australian Data
At the beginning of the week, investors sold the Australian Dollar (AUD) from its best levels in around two months in a bout of profit-taking.
This was despite the latest US-China trade truce being news that would typically benefit the Australian Dollar, due to Australia’s close trade ties with China.
The Australian Dollar’s selloff was limited due to factors like this supporting it, and investors began to buy the ‘Aussie’ higher again following yesterday’s Reserve Bank of Australia (RBA) interest rate cut.
This was because the RBA indicated that further monetary policy easing would be on hold for now, dousing market expectations for further dovishness.
Still, investors were hesitant to keep buying the Australian Dollar back to its best levels.
Today’s Australian ecostats were too mixed to support further ‘Aussie’ gains, with Australian services PMI data slowing while the nation’s May trade balance and exports data came in higher than expected.
US Dollar (USD) Exchange Rates Run Out of Steam as Trade Optimism Cools
The US Dollar (USD) saw a surge in demand on Monday, in reaction to the weekend’s trade truce between the US and China at the G20 Summit.
However, this recovery rally was limited, as analysts have expressed concern about whether US-China trade relations will really improve.
According to Jan Lambregts, Head of Global Economics and Markets at Rabobank London, trade sentiment was still quite low overall:
‘We are basically back where we ‘left off’ when negotiations (with China) broke down in May, which was hardly a good spot,’
On top of this, US trade relations with other trade partners also remain strained. The US continues to threaten trade tariffs on the EU, and with US trade fears rising again investors are once again finding the US currency less appealing.
Australian Dollar to US Dollar (AUD/USD) Exchange Rate Investors Await Key Data
With both the Australian Dollar (AUD) and US Dollar (USD) seeing mixed demand today, investors are anticipating upcoming major ecostats that could influence currency movement.
Australian Dollar investors are anxious about whether the Reserve Bank of Australia’s (RBA) recent action will be enough to help Australia’s economy, so will be looking for any signs of resilience in the major Australian data due for publication tomorrow.
Australia’s May retail sales could be this week’s most influential Australian dataset. The retail figure is expected to improve from -0.1% to 0.2%.
As for the US Dollar, today’s US non-manufacturing PMI from ISM, and Friday’s key Non-Farm Payrolls report for June, could influence Federal Reserve interest rate cut bets and the US currency’s movement.
Of course, the Australian Dollar to US Dollar (AUD/USD) exchange rate could also be driven by any notable developments in US-China trade relations.