AUD USD Exchange Rate Benefits from Trump Jitters
The Australian Dollar to US Dollar exchange rate has been highly volatile this week, but looks to end the week above its opening levels due to persistent political jitters in the US.
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The past week has seen AUD USD rise from opening levels of 0.7388 to highs of 0.7443.
The Australian Dollar has finally put on an improved performance this week, after trending weakly throughout April. This is because of stronger demand for commodities throughout the week and solid Australian ecostats.
Prices of iron ore, Australia’s most lucrative commodity, have finally begun to recover this week. The commodity was trading at around US$61.60 a tonne towards the end of the week after slipping from weekly highs.
The biggest influence on ‘Aussie’ strength this week though was April’s Australian employment stats, which beat expectations.
The participation rate remained at 64.8% instead of falling to 64.7% as predicted, and the unemployment rate actually fell to 5.7% despite being estimated to remain at 5.9%.
This was due to a much bigger employment increase than expected. Employment was projected to rise by 5k but instead saw an improvement of 37.4k.
There was a downside however. Full-time employment dropped by -11.6k and part-time employment rose by a considerable 49k.
While the Reserve Bank of Australia (RBA) is likely to have a steadier outlook on Australian monetary policy due to the mostly solid job stats, the drop in full-time employment means a much more hawkish outlook is unlikely.
Overall though, the ‘Aussie’ became appealing enough to advance against the US Dollar this week as US political concerns worsened.
US President Donald Trump has been embroiled in scandal this week due to his speculated connections to Russia and his reasons for firing ex-FBI Director James Comey.
Trump admitted earlier in the week that he had given intelligence information to Russian officials. It was then reported that he had asked Comey to drop an investigation into Michael Flynn.
Some critics have perceived this as an obstruction of justice and began to float the word ‘impeachment’ around, which shocked USD traders and made risky currencies less appealing.
The US Dollar was so weak however that even the risky ‘Aussie’ was able to benefit against it this week.
The week’s US data was also unable to provide the US Dollar any notable support, as Trump jitters had also weakened June Federal Reserve interest rate hike bets.
Next week’s trade session is likely to be quieter for Australian Dollar trade amid a lack of influential Australian data due for publication.
Westpac leading index data and construction work stats are the only datasets of note. They will be published on Wednesday.
Besides that, the ‘Aussie’ will continue to be influenced by iron ore price shifts and risk-sentiment.
The US Dollar is a little more likely to be influenced by data next week, as Gross Domestic Product (GDP) projections for Q1 2017 will be published. Other US data includes new home sales, existing home sales, Fed meeting minutes and durable goods orders.
However, any major developments in Trump-Russia scandals would likely overshadow data, especially if it worsens Fed interest rate hike bets.
At the time of writing this article, the AUD USD exchange rate trended in the region of 0.7440. The USD AUD exchange rate traded at around 1.3440.