Volatility in AUD USD Exchange Rate as Trump Worries Grow
The Australian Dollar US Dollar (AUD USD) exchange rate has been marred by increased volatility over the last couple of days as uncertainty towards the new US administration grows.
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Trump Concerns Weigh on US Dollar (USD)
Markets began to shy away from the US Dollar early on Wednesday as rhetoric from Donald Trump and his advisers became increasingly aggressive, culminating in the head of Trump’s new National Trade Council, Peter Navarro, accusing Germany of currency manipulation.
Navarro claimed in an interview with the Financial Times that the Euro was an ‘implicit Deutsche Mark’ with Germany using the ‘grossly undervalued’ currency to gain an unfair trade advantage with the US.
The comments appeared to be in line with Trump’s recent statement that the US Dollar is ‘too strong’. However this confused investors as Trump’s plans to weaken USD seem to be at odds with his intention to impose tariffs against imports to the US, something that would traditionally strengthen the ‘Greenback’.
RBA Predictions Pressure Australian Dollar (AUD)
The Australian Dollar faced its own pressure on Wednesday following a prediction that the Reserve Bank of Australia (RBA) may look to cut interest rates further in May.
Despite the strong performance of the housing market in January, Shane Oliver, head of investment strategy and chief economist at AMP Capital. predicts that RBA will soon raise rates due to the underperformance of other sectors of the economy, with the recent rise in unemployment being of particular concern.
AUD USD Forecast: Fed Meeting Ahead
The AUD USD exchange rate could plummet early on Thursday as markets wait to hear from the latest Federal Reserve Policy meeting. While investors do not expect the Fed to raise rates at this month’s meeting, they are hoping that Fed Chair Janet Yellen will hint towards a rate hike in March.
However the ‘Aussie’ may find some support from the domestic Trade Balance report, which is forecast to show that Australia’s trade surplus grew from $1.24bn to $2.2bn in December.
Current Interbank Exchange Rates
At the time of writing the AUD USD exchange rate was trending around 0.75 and the USD AUD exchange rate was trending around 1.31