Australian Dollar US Dollar (AUD/USD) Exchange Rate Slips as Fed Dampens Hopes of Fast Economic Recovery

Australian Dollar US Dollar (AUD/USD) Exchange Rate Falls as Fed Leaves Rates on Hold

The Australian Dollar US Dollar (AUD/USD) exchange rate edged lower this morning, leaving the pairing trading at around $0.6541.

The US Dollar edged lower against a handful of currencies on Thursday after the US Federal Reserve left the door open to further easing during yesterday’s meeting.

However, against the risk-sensitive ‘Aussie’, USD was able to make slight gains.

The Fed dampened any expectations of a quick economic recovery from the coronavirus pandemic which likely weighed on AUD.

The Federal reserve left interest rates on hold near zero while promising to expand emergency programmes as needed to boost the economy.

Optimism amongst traders improved as more countries are taking steps to re-open their economies as the number of coronavirus infections slow.

However, it is argued that it will take US consumer spending several months to fully recover.

According to Minori Uchida, head of global market research at MUFG Bank in Tokyo:

‘The Fed has already eased a lot, but the fact that it said it would be willing to do even more has taken some gloss off the Dollar.’

Australian Dollar (AUD) Edges Lower despite Positive Coronavirus Drug Trial

The Australian Dollar remained under pressure today, with its earlier slide halted as China’s PMI held above 50.

This morning’s data suggests that China’s economy continues recover after being severely hit by the coronavirus crisis.

China’s manufacturing PMI came in at 50.8. While it was below forecasts, the reading still showed expansion which boosted sentiment.

The country’s non-manufacturing sector was also strong, coming in at a higher-than-expected 53.2, and boosting the composite PMI to 53.4.

Meanwhile, coronavirus drug trials also offered markets support on Thursday after positive results from a coronavirus drug trial.

However, while increased risk appetite boosted the ‘Aussie’ overnight, the currency dipped on Thursday morning leaving AUD/USD trading lower.

Australian Dollar US Dollar Outlook: US Jobless Claims in Focus

Looking ahead to this afternoon, traders will be focused on the US jobless claims which could cause the US Dollar (USD) to suffer losses against the Australian Dollar (AUD).

If the huge influx of jobless claims in the United States stabilises, it will boost risk sentiment. This will send traders away from the safety of the USD.

Meanwhile, the ‘Aussie’ could give up these losses on Friday following the release of Australia’s manufacturing PMI.

If data shows the Australian manufacturing sector suffers huge losses in April due to the coronavirus, the Australian Dollar US Dollar (AUD/USD) exchange rate will edge lower.

 

Millie Empson

Contact Millie Empson


Related