AUD/USD Rises on Risk Appetite Even as China TPP Hopes Quashed
Risk appetite is driving the AUD/USD exchange rate higher today, despite a lack of domestic data or news to support gains.
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Australian Dollar Rises on Thin Data despite Deflating China TPP Hopes
A thin day of news and data is keeping the Australian Dollar US Dollar around opening levels.
The ‘Aussie’ has been somewhat hampered by comments from Trade Minister Steve Ciobo on the likelihood of China joining the Trans-Pacific Partnership (TPP).
The future of the trade deal has been thrown into jeopardy since US President Donald Trump withdrew his nation from the deal, which was only agreed upon last year and has yet to be ratified.
Although eleven other nations, including Australia, New Zealand and Japan, are party to the agreement, the US was considered the keystone of the endeavour.
There had been hopes that China could be enticed to step into the void; an ironic proposition considering the deal’s original purpose was supposedly to curb Chinese influence in the Asia-Pacific.
Ciobo has poured cold water on those hopes, however, stating ‘it’s very unlikely that China would join the TPP’.
The Australian Dollar continues to rise, despite a lack of support. Bloomberg’s commodity price index has declined by -0.4%. News that China Railway Group LTD, the second largest builder of infrastructure in the world, will back a new multi-billion Australian Dollar mining project in Southern Australia has improved sentiment for the risky ‘Aussie’.
Hawkish Fed Mester Comments Fail to Boost Demand for US Dollar
Loretta Mester has become the latest regional Federal Reserve President to exhibit confidence on the outlook for US monetary policy.
Taking questions in Singapore following a speech, Mester claimed she would be ‘comfortable’ hiking rates ‘at this point’.
‘My outlook builds in a gradual increase in the Funds rate over time. And I’m comfortable with that,’ she explained, stating also that, ‘in my mind, where the economy is now argues that we should be bringing the rate up.’
Markets have already largely priced-in monetary tightening this year. Before becoming any more bullish, investors want to see concrete signs from Donald Trump that the fiscal stimulus plans he alluded to during the election campaign will be implemented.
His attempts to boost the labour market with potentially billions of US Dollars’ worth of investment could be the difference between two interest rate hikes during 2017 and three. The lack of clarity is therefore keeping USD soft.
Australian Dollar to US Dollar to Make Further Gains on Consumer Confidence Figures?
The only data set for release today for either Australia or the US is the ANZ Roy Morgan weekly consumer confidence index.
This will give an indication of how Australian households felt during the week ending February 19th.
Rising confidence bodes well for the economic outlook, so an improved score would likely help the Australian Dollar to US Dollar exchange rate move higher.