USD to AUD Exchange Rate Advances on Chinese Inflation Data
US labour market data has been generally negative on Thursday which has stymied speculations of a near-future revision of US interest rates. Despite the emergence of positive Australian labour market data on Thursday the ‘Aussie’ (AUD) has once again been hindered by faltering inflation data out of China.
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The US Dollar to Australian Dollar exchange rate is currently trending in the region of 1.0965.
Those invested in the ‘Greenback’ will have been pleased with the bullish run of late amidst speculation of a sooner-than-anticipated Federal Reserve rate increase. US domestic data has generally printed positively leading up to Thursday’s key labour market data which is the primary indicator of the likelihood of a benchmark interest rate hike.
Life as an ‘Aussie’ investor has been much rockier over the past week which was sparked off by a dramatic dip in global commodity prices. Data from the US and China indicated that the supply of raw materials far outweighs the demand. The result was to see commodity prices slashed; including iron ore (Australia’s largest commodity export).
The US Dollar to Australian Dollar exchange rate has hit a low today of 1.0856.
Thursday’s crucial US domestic data has been generally poor and may act as an excuse for the Federal Reserve to continue with their current monetary policy. Continuing Claims bettered the market consensus of 24,900 unemployed with the actual data printing at 24,870. The small improvement over the forecast figure may not be enough to outweigh the fact that the actual data is an unwanted increase on the previous figure of 24,780. Initial Jobless Claims failed to meet with the forecast decline to 300,000 from 304,000 with the actual figure showing 315,000 newly unemployed.
Australian data has been much more positive on Thursday. The Unemployment Rate was expected to drop fractionally from the previous growth of 6.4% to 6.3% but the actual data showed a positive declination to 6.1%. Employment Change yielded the greatest surprise. Having been expected to jump from the previous contraction of -4,100 to 15,000, the actual data was a massive increase to 121,000.
The initial ‘Aussie’ gains registered were short-lived, however, after Chinese inflation data brought the Australian Dollar back down with a bang. The year-on-year Consumer Price Index failed to meet with the forecast growth of 2.2%, with the actual data showing an increase of only 2.0%. The yearly Producer Price Index also failed to meet with the market consensus of a -1.1% contraction, with the actual result having contracted by -1.2%. The cooling growth of inflation could spell disaster for China if the People’s Bank of China feels they have to introduce fresh stimulus to counteract the problem.
The US Dollar to Australian Dollar exchange rate has reached a high today of 1.0973.
The USD to AUD exchange rate was trending in a stronger position ahead of the publication of Advance Retail Sales figures for the US. This week the Australian Dollar has come under considerable pressure as a result of rate hike speculation in the US and UK, a poor Chinese inflation print and disappointing domestic data. The US Dollar, meanwhile, has been on a bullish run thanks to a run of upbeat ecostats and supportive statements from several Fed officials regarding the timeline for increasing interest rates. If today’s US retail sales report impresses (showing a monthly sales increase of 0.6% or more) the US Dollar to Australian Dollar exchange rate is likely to enter the weekend in an even stronger position. The US University of Michigan Confidence gauge will also be of interest. It is expected to have risen from 82.5 to 83.3 in September.