Australian Dollar to US Dollar Exchange Rate Hits Fortnight High on Data and Political Shifts
The Australian Dollar to US Dollar (AUD/USD) exchange rate has once again rebounded from near its lowest levels this week, but with more strength than its other recent jumps as the Australian Dollar (AUD) benefits from fresh data and shifts in market sentiment.
Last week’s trade and central bank speculations left AUD/USD fluctuating, but the pair remained close to the interbank level of 0.67 throughout.
After touching on a weekly low of 0.66 yesterday though, AUD/USD has seen a strong rebound of almost a cent and at the time of writing was trending close to its best levels in a fortnight.
If upcoming US data disappoints investors, the Australian Dollar to US Dollar exchange rate could be in for further gains.
Australian Dollar (AUD) Exchange Rates Advance as Reserve Bank of Australia (RBA) Easing Bets Lighten
Speculation that the Reserve Bank of Australia (RBA) could cut Australian interest rates again as soon as October lightened further today, as the latest Australian data supported the bank’s cautiously optimistic outlook for the economy.
Australia’s Q2 growth rate came in at 0.5% quarter-on-quarter and 1.4% year-on-year as forecast. The previous QoQ figure was revised higher while the previous yearly figure was lowered from 1.8%.
More impressive was Australia’s August services PMI from AiG, which beat expectations and rebounded from a contraction of 43.9 to growth of 51.4.
The RBA avoided taking a dovish stance in its Tuesday policy decision, and this data supported the bank’s stance as well as supporting the Australian Dollar (AUD).
On top of the domestic support, the trade-correlated Australian Dollar has also been benefitting from higher market risk-sentiment as political uncertainties in Britain, Italy and Hong Kong lightened.
US Dollar (USD) Exchange Rates Down on Poor US Data and Risk-Sentiment
The US Dollar (USD) has seen mixed demand in recent weeks amid concerns that the US economy could be hit by the US-China trade war, but trade war fears have also led to some support for the US Dollar as a safe haven currency.
However, US economic fears only worsened this week, following the publication of August’s US manufacturing PMI reports. While Markit’s PMI beat forecasts, it was only just above stagnant.
Meanwhile, ISM’s more influential PMI unexpectedly printed a surprisingly notable contraction of just 49.1 rather than the expected growth of 51.1.
The data worsened concerns that the US economy was being hit by the trade war, and US recession speculation flared up slightly.
This week’s rise in risk-sentiment, as global political jitters ease, also weighed on the safe haven US Dollar.
Australian Dollar to US Dollar (AUD/USD) Exchange Rate to be driven by Risk and US Data
Most of this week’s most notable Australian data and news has come and gone already, and has left the Australian Dollar (AUD) in a slightly better position against the US Dollar (USD).
However, recent AUD/USD gains have also been due to shifts in market risk-sentiment, and this will likely continue to drive the currencies towards the end of the week.
The trade-correlated Australian Dollar could be in for further gains if political jitters if Britain and Hong Kong continue to lighten, and make investors more willing to take risks.
However, if US-China trade tensions worsen again, or if upcoming US data impresses investors, AUD/USD could slide from its weekly best.
Key US data due for publication in the coming days includes ISM’s non-manufacturing PMI tomorrow, and the highly influential Non-Farm Payrolls report on Friday.
The best chance the Australian Dollar to US Dollar (AUD/USD) exchange rate has of climbing further in the coming days is if risk-sentiment persists and upcoming US data disappoints investors.