Australian Dollar US Dollar (AUD USD) Volatile on Mixed Data
The Australian Dollar to US Dollar exchange rate has been fluctuating a great deal recently as a result of various mixed data releases.
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First and foremost were some somewhat disappointing Chinese data releases, particularly China’s balance of trade, which demonstrated a narrowing in the surplus from $48.61BN to $46.74BN in the early hours of Tuesday morning.
Chinese year-on-year exports for July demonstrated growth of 7.2%, easing from 11.3% in July 2016, whilst their year-on-year imports also dropped from 17.2% previous to 11.0%, below the market consensus of 16.6%.
This news weakened demand for the Australian Dollar, as China is Australia’s largest trade partner and indeed the world’s principal importer of iron (used in the production of steel).
Australia itself, however, has received some positive data releases in the form of NAB business confidence and conditions surveys for July, both of which exceeded expectations.
The NAB business confidence survey printed at 12, up from 8 in June, whilst the conditions survey printed at 15, up from 14.
These figures come after yesterday’s positive construction surge, with AiG’s performance of construction index demonstrating a jump to 60.5 in July, up from 56 in June (the sixth consecutive month of expansion and indeed the highest reading since the indicator was created).
US Dollar (USD) Gains on Robust ‘Jolts’ Job Print
The US Dollar gained on Tuesday afternoon on another run of positive jobs data.
The Jolts job openings figure for June printed at 6163 million, up from 5702 in May, and indeed the 5750 predicted.
The IBD/TIPP economic optimism index also jumped from 50.2 to 52.2, its highest since March.
Despite these figures being considered by some to be low priority, they succeeded in driving even more demand to the US Dollar, causing AUD USD to fluctuate again, this time downward.
It is possible that the recent bout of positive jobs data is driving more investors to buy into the ‘Greenback’ in anticipation of Friday’s US inflation figure – a figure that is already predicted to jump from 1.6% to 1.8%.
AUD USD Forecast: Liable to Drop if US Inflation Proves Better than Anticipated
Year-on-year US consumer prices are currently forecast to increase from 1.6% in June to 1.8% in July. Should this materialise then the jump alone will drive further demand to the ‘Greenback’.
Markets are currently awaiting the release of US producer prices for July (due on Thursday), however, as these will give investors better insight into what to expect on Friday.
Australia will see even more confidence figures on Wednesday, including the Westpac measure of consumer confidence, which is currently predicted to rise, if this occurs then the Australian Dollar could scrape some gains before the weekend.