AUD USD Exchange Rate Fluctuates as Consumer Spending Improves
The Australian Dollar US Dollar (AUD USD) exchange rate rallied late on Tuesday as data showed that domestic household spending strengthened last month.
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Australian Dollar (AUD) Bolstered by Rising Consumer Spending
The Australian Dollar was strengthened on Tuesday as investors welcomed the Commonwealth Bank’s latest Business Sales Indicator (BSI) figures.
The BSI, which is used to measure spending on goods and services by households in Australia showed that spending saw a healthy increase in May whilst spending for the two preceding months was also revised up.
Commsec chief economist Craig James said;
‘As we noted last month, the timing of Easter and school holidays may have affected spending levels and a clearer picture of economy-wide spending would emerge with more data.’
‘That now appears to be the case with data showing solid sales growth in May across all states and territories and industry sectors. This is very encouraging economic news in the face of some recent gloomy pronouncements.’
Investors are hopeful that this will help promote growth in the second quarter, and allow GDP to recover after slowing to just 0.3% at the start of the year.
US Dollar (USD) Rallies following Rosengren Speech
The US Dollar did not stay weakened for long however as overnight on Tuesday a speech by Boston Federal Reserve President, Eric Rosengren indicated to investors that the Fed would be unable to leave interest rates unchanged for too long.
While Rosengren did not provide his own outlook on how the central bank should proceed with its monetary policy he did warn that leaving interest rates too low would pose financial stability risks in the US and that policy makers should take this into account when deciding on future policy.
AUD USD Forecast: US Home Sales Data Ahead
The AUD USD exchange rate may advance in the second half of the week as US Existing Home Sales are expected to slide from 5.57m to 5.55m in May.
Meanwhile the Australian Dollar may stumble of on Wednesday if Westpac’s Leading Index shows that economic activity continued to decline last month.
Current Interbank Exchange Rates
At the time of writing the AUD USD exchange rate was trending around 0.7599 and the USD AUD exchange rate was trending around 1.3157