A Wandering AUD Looks to the US and China For Direction
AUD investors look towards the Unemployment data due to be released on the 13th of April. In the interim week however the AUD’s direction will be led by the flurry of figures out from the US and China.
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China’s President Xi Jinping will be meeting in person with President Donald Trump on Thursday. A lot of controversy surrounding the pair as President Trump has constantly taken to twitter to bash their trading partners, even threatening to declare China as a currency manipulator. It looks however that China is much more prepared to work with Trump than previously anticipated, this is good news for both parties involved and subsequently could be of great benefit to the Australian economy.
Historically when China’s economy is performing Australia’s exports rise thus stimulating our economy, if China can work a deal with the US to stimulate its own economy we could well expect a stronger AUD against many currency pairings.
An even greater Australian trade balance figure is expected next period if China’s economy continues to strengthen. An impressive 3.57B a few days ago up from 1.5B last period pulled up the AUD only to have it pushed back down on the back of RBA Governor Lowe’s comments that a strong AUD will be detrimental to Australia’s economic growth.
Federal Reserve Set to Hike Cash Rate Next Quarter
4:00am this morning GMT +10 time saw the release of the Federal Open Market Committee (FOMC) meeting minutes. Again confirming the intent of the Fed to hike the cash rate in the next period and the strong possibility of further hikes later in the year. Furthermore Fed officials have said this year they will begin the shedding of the $4.5 Trillion in bonds currently held on the central banks’ balance sheet. This is significant as it points to perhaps an even faster pace by the Fed with regards to raising rates.
Despite the long term Bullish sentiment overnight the USD actually fell against the AUD; mainly due to the Non-Manufacturing PMI data coming out at 55.2, lower than the 57 expected. US unemployment claims are out later tonight, this will provide some short term direction for the USD and it is expected to improve from 258K to 251K.
The AUD is currently trading at 0.7571 against the USD