Australian Dollar US Dollar Slips as Investors Head for Safe Havens
The Australian Dollar US Dollar exchange rate weakened slightly on Monday as the latest actions of US President Donald Trump sent traders looking for safer investments. However, the US Dollar itself struggled to capitalise due to Trump jitters. As a result, AUD USD didn’t fall far from the week’s opening levels of 0.75.
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Australian Dollar (AUD) Slips on Lower Demand for Risk
While its losses were modest, the Australian Dollar slipped throughout Monday’s trade session as investors sold off the risk-correlated ‘Aussie’ in favour of the ‘safe haven’ US Dollar.
The latest move into safe havens comes after US President Donald Trump issued an executive order to bar citizens and refugees from seven predominantly Muslim nations from entering the USA for at least 90 days, causing widespread uncertainty.
The controversial move has been criticised by politicians around the globe, as well as businesses that thrive on skilled labour from overseas.
Due to the lack of appetite for risky currencies, investors were not appeased by news that prices of iron ore, Australia’s most lucrative commodity, had also improved when markets opened this week despite Chinese New Year festivities.
US Dollar (USD) Jittery as Traders Ponder Trump’s Protectionism
The aforementioned ‘Muslim ban’ also caused uncertainty to increase over in the US, as analysts speculate the US economy will be affected by a sudden hit to supply of skilled immigrant labour.
While the US Dollar’s position as a ‘safe haven’ currency allowed it to benefit despite this, it was not able to capitalise against a weaker Australian Dollar.
USD investors have grown concerned that Trump has been just as controversial in his first week of Presidency as he was on the campaign trail, despite previous hopes that he would be more pragmatic as President.
Monday’s US data was unable to bolster the ‘Greenback’ considerably either.
December’s personal income figure was predicted to improve to 0.4%, but only rose to 0.3%. The Personal consumption expenditure core figure came in at 1.7% year-on-year as projected, which was enough to indicate the US economy remained sturdy and helped the US Dollar to strengthen.
Australian Dollar US Dollar Forecast: Federal Reserve Meeting in Focus This Week
While developments in the still-new US Trump Presidency are likely to inspire movement in the Australian Dollar US Dollar exchange rate this week, the main event is sure to be Wednesday’s Federal Reserve policy decision.
The Federal Open Market Committee (FOMC) will hold its first policy decision of the year during Wednesday’s American session and while no change in policy is expected, traders look forward to hearing if there has been any shift in outlook.
The Fed stated in December that it foresaw as many as 3 potential interest rate hikes throughout 2017. Any dovish shift from this could cause the US Dollar to plummet.
Before that, Tuesday’s session may also cause some shifts in AUD USD. Australia’s NAB business confidence figures from December will be published, as well as US Q4 employment cost index and January consumer confidence results.
AUD USD Interbank Rate
At the time of writing, the Australian Dollar US Dollar exchange rate trended in the region of 0.75, while the US Dollar Australian Dollar exchange rate traded at around 1.32.