Australian Dollar US Dollar Exchange Rate Dips as US Home Sales Ease in December

AUD/USD Exchange Rate Eases, ‘Greenback’ Rises as Markets Brace for US Goods Orders Report

The Australian Dollar US Dollar (AUD/USD) exchange rate dipped this morning, with the pairing currently trading around $0.674 following this morning’s release of the US home sales report for December, which fell below consensus at 0.694 million.

Matthew Speakman, an Economist at the US real estate firm Zillow, was upbeat in his analysis, however, commenting:

‘Low mortgage rates, a robust labour market and stabilizing geopolitical tensions suggest that demand for housing will stick around, and buyers are hungry for more housing options.’

The US Dollar (USD) struggled to make much headway on the ‘Aussie’, however, as this was the third consecutive slump in home sales due to a shortage of affordable homes.

Due to the relatively strong US housing market, which remains bolstered by lower mortgage interest rates, this left US financial markets relatively unmoved.

In further US economic news, today will see the release of US goods orders report for December, which is expected to flatten at 0%. As a result, we could see the USD/AUD exchange rate dip on rising concerns for the US economy.

AUD/USD Exchange Rate, Risk-Off Markets Weigh on ‘Aussie’

The Australian Dollar (AUD) edged higher against the rudderless US Dollar (USD) despite a risk-off market trade move due to pressure from China’s coronavirus outbreak.

With China being Australia’s largest trading partner, ‘Aussie’ investors are remaining cautious as this could soon have a negative knock-on effect on Australia’s global trade-reliant economy.

Nema Ramkhelawan-Bhana, an Analyst at RMB Global Markets, commented:

‘The speed at which the virus is spreading is a likely catalyst for volatility this week, manifesting in equities losses and commodities price swings.’

In Australian economic news, today saw the release of December’s National Australia Bank’s business confidence report, which fell below forecasts from 0 to -2.

Alan Oster, A Chief Economist at NAB Group, commented:

‘For now, the survey has not showed clear evidence of a bushfire impact, but the more significant impact is likely to have occurred in January… Conditions appear to have bottomed, but our forward-looking indicators suggest they are likely to remain weak. We think that more policy stimulus will be needed to boost the [Australian] economy over 2020.’

AUD/USD Outlook: Could the ‘Aussie’ Continue to Sink on Risk-Off Market Mood?

Looking ahead to tomorrow, we could see the AUD/USD exchange rate rise if Australia’s inflation figures confirm forecasts and rise in the fourth quarter.

Tomorrow will also see the release of Australia’s Westpac leading index report for December. Any signs of improvement could further bolster confidence in Australia’s economy and prove AUD-positive.

US Dollar (USD) investors will be looking ahead to tomorrow’s release of the US consumer confidence report, with any signs of an improving outlook for American consumer providing a boost for the ‘Greenback’.

The AUD/USD exchange rate will continue to be driven by China’s developing crisis, however, with any further signs of the coronavirus outbreak spreading weakening the ‘Aussie’ as market risk appetite slumps.

David Moore

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