Australian Dollar to US Dollar Exchange Rate Dips as US Confidence Rises
The Australian Dollar’s temporary gains against the US Dollar largely evaporated following a pair of US Dollar-boosting Federal Reserve remarks.
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Commonwealth Bank Senior Currency Strategist Elisa Haddad hits the nail on the head;
‘AUD/USD is trading heavy near 0.7620 because of lower iron ore prices. Iron ore future prices fell overnight to its lowest level since early February on growing stockpiles at major Chinese ports’.
The continued surpluses of iron ore represent a problem for the Australian economy, as if the supply of iron ore outstrips demand, the price falls, putting pressure on Australian exporters.
Further lowering Australian Dollar demand have been Fed officials Charles Evans and Robert Kaplan.
Commenting on US inflation (and by extension the odds of a near-term interest rate hike) Evans has stated that inflation is ‘well on its way’ towards reaching Fed targets.
Evans notably admitted that Donald Trump’s recent defeat on a healthcare bill added uncertainties, but traders were more inspired by the optimistic aspects of his speech.
Kaplan’s comments were similarly positive, focusing on moving ahead ‘gradually and patiently’ when it came to interest rate increases.
The policymaker added that;
‘If we continue to make progress, I will continue to be supportive of taking additional steps to remove further amounts of [policy] accommodation’.
In the near-term, the Australian Dollar is likely to be moved by US news, with further comments coming from Evans on Thursday.
Later on Thursday, the Australian HIA new home sales figure is due, which previously fell by -2.2% in January.
Closing weekly AU news will be private sector credit stats for February.
If the overriding sentiment this week is that a Fed rate hike could be coming in May, however, then the Australian Dollar may not receive much support from these scant domestic announcements.
As well as more Fed remarks over the week, the US Dollar is also likely to be moved by the Q4 GDP growth rate figure due on Thursday.
As the final figure for Q4, this is expected to be high-impact. Predictions are for a quarterly slowdown from 3.5% to 2%, which may be enough to push the US Dollar down and raise Australian Dollar demand once again.
Recent Interbank AUD USD Exchange Rates
At the time of writing, the Australian Dollar to US Dollar (AUD USD) exchange rate was trading at 0.76 and the US Dollar to Australian Dollar (USD AUD) exchange rate was trading at 1.31.