Australian Dollar to US Dollar (AUD/USD) Exchange Rate Forecast to Hold Gains after US PMIs Miss Estimates
AUD/USD Conversion Rate Predicted to Advance as Gold prices Recover
The Australian Dollar to US Dollar (AUD/USD) exchange rate edged higher by around 0.6% during Friday’s European session.
If you're looking to make an international money transfer, we recommend TorFX.
After commodities prices, with particular reference to gold and oil, dived in response to the Federal Reserve cash rate increase; the Australian Dollar softened versus many of its peers. However, improvement in global stocks and stability in China has seen losses clawed back during Friday’s European session. In addition, gold prices have strengthened as traders capitalise on cheaper prices. Of particular significance, for those invested in the ‘Aussie’ (AUD), was the MNI Chinese Business Indicator for December which advanced from 19.9 to 52.7; breaking through the 50 mark which separates growth from contraction.
Commenting on the latest survey, Philip Uglow, Chief Economist of MNI Indicators said, ‘It has been a choppy year for the Chinese economy with volatility in the MNI China Business Sentiment Indicator at the highest since 2009, while GDP for the year is likely to grow at the slowest pace in 25 years. Still, the relatively modest easing in the MNI China Business Sentiment Indicator over the year as a whole suggests China is undergoing more of a bumpy rather than hard landing. While our expectation is that growth over 2016 will likely ease further, continued reforms and a gradual structural shift in the economy away from industrial overcapacity towards greater depth in the service economy will pave the way for more sustainable growth in the long-term.’
The Australian Dollar to US Dollar (AUD/USD) exchange rate was trending in the region of 0.7168 during Friday’s European session.
USD/AUD Conversion Rate Predicted to Decline after US Composite and Services PMIs Disappointed
Having held gains following the first Federal Reserve cash rate increase in nine-years, the US Dollar edged lower during Friday’s European session. The depreciation can be linked to disappointing domestic data results. The Markit US Composite PMI dropped from 55.9 to 53.5 is December whilst the Services PMI dropped from 56.1 to 53.7; both failing to meet with median market forecasts. The US Dollar is unlikely to see significant losses, however, with demand continuing to simmer following the ‘historic’ Fed rate increase.
Commenting on the flash PMI data, Chris Williamson, chief economist at Markit said: ‘A lack of inflationary pressures, slowing growth and a drop in business confidence to a five-year low are all disappointing news for an economy which has seen the first US interest rate hike for almost a decade. The Fed projections point to a further four quarter point hikes in 2016, but with data as weak as these, we’re likely to see a far less aggressive rate hike progression. The survey data are consistent with gross domestic product rising at an annualised rate of 1.8% in the fourth quarter. That’s down only slightly from the 2.1% pace observed in the third quarter, but the survey shows a more severe slowing towards the end of the fourth quarter, with an annualised GDP growth rate of just 1.4% indicated for December alone.’
The Australian Dollar to US Dollar (AUD/USD) exchange rate dropped to a low of 0.7112 during Friday’s European session.
Australian Dollar to US Dollar (AUD/USD) Exchange Rate Forecast to Hold Gains ahead of US Rig Count Data
Given the absence of further domestic data pertaining to Australia, the AUD/USD exchange rate is likely to hold gains for the remainder of Friday’s trade. However, there is the potential for changes in response to US Baker Hughes Rig Count data. Should the data show a rise the price of oil is likely to plummet further. This could weigh on commodity prices and ultimately on demand for the ‘Aussie’.
The Australian Dollar to US Dollar (AUD/USD) exchange rate climbed to a high of 0.7178 during Friday’s European session.