AUD USD Exchange Rate Declines on Damp Market Sentiment

United States Dollar (USD)

With a lack of appetite for risk-correlated assets, thanks to volatile global equity markets and commodity prices, the Australian Dollar softened versus most of its peers overnight. Heightened expectations of Reserve Bank of Australia (RBA) intervention at the next available opportunity also continues to limit the appeal of the ‘Aussie’ (AUD).

Australian Dollar (AUD) Exchange Rates Continue to Struggle following Dovish RBA Minutes

As explained above, damp market sentiment has weighed heavily on demand for the ‘Aussie’. Overnight, the AUD USD exchange rate held losses despite an absence of US data to provoke movement. Market analyst Richard Perry wrote;

‘The recent recovery in risk appetite which saw equity markets pulling higher, Treasury yields bouncing and safer havens correcting seems to be starting to show signs of stalling. The driver seems to be a stronger Dollar in the last few days, with the Dollar Index breaking out to its highest level since early March.’

The Australian Dollar also continues to struggle amid expectations that RBA policymakers will ease outlook to combat AUD overvaluation. The publication of minutes pertaining to the most recent RBA policy decision showed that there was a lack of confidence in domestic growth. The minutes also hinted strongly that policymakers’ will likely call for another rate cut before year-end.

This morning, the Australian Dollar may see volatility in response to second-quarter Business Confidence data. However, with market sentiment the dominant force behind currency movement of late, the domestic data may not be hugely impactful.

US Dollar (USD) Exchange Rates Forecast to Advance ahead of Labour Market Data

In contrast to that of the performance of the Australian Dollar, the US Dollar strengthened considerably in response to risk-off trade. In a strange situation, dampened market sentiment has been linked to a stronger US Dollar, which has strengthened in response to risk-off trade.

One of the major reasons for the US Dollar’s upside bias has been a succession of positive domestic ecostats. This has doubled market odds that the Federal Reserve will hike the benchmark rate again this year. Writing for Reuters, Dion Rabouin stated;

‘The Dollar has benefited in recent weeks from data showing strength in the US labour market and inflation that has bolstered expectations the Federal Reserve may raise rates before the end of the year. Fed funds futures rates point to investors seeing about a 46 percent chance the Fed will raise interest rates by its December meeting, according to CME Group’s FedWatch tool, compared with less than 20 percent a few weeks ago. Expectations of a Fed increase come as other major central banks around the world gear up to ease monetary policy.’

However, there are several analysts that believe that the Federal Reserve will not be able to hike rates due to weak global economic growth and the high value of the US Dollar. If the Fed hikes, the Dollar will advance further. This could reduce foreign investment and weigh on export growth.

During Wednesday’s European session, the AUD USD exchange rate was trending within the range of 0.7458 to 0.7510.


Ollie relocated to Cornwall after obtaining his degree from Portsmouth University. He works with one of the UK’s largest currency brokers, studying the currency market and writing up-to-the-minute updates on market movements for a variety of publications, both in print and online. - View all posts by Ollie Carpenter

« Previous Story

Australian Dollar US Dollar (AUD USD) Exchange Rate Improves on Chinese GDP Growth

Next Story »

Australian Dollar Soars Against USD as Fed Meeting Approaches

Disclaimer: and its data provider, TorFX, make no claims regarding the validity or exactness of the information provided in on this site and will not be held liable for any use, interpretation, or other implementation of the information provided. make no warranties, express or implied, as to results to be obtained from use of such information, and make no express or implied warranties of condition, quality, performance, merchantability or fitness for a particular purpose or use. shall not have any liability for the accuracy of the information contained in the services provided or ommissions there in which are made available on a free, as-is basis. None of the aforementioned parties shall be liable for any third party claims or losses of any nature, including, but not limited to, lost profits, punitive, consequential, special, incidental, indirect or similar damages even if advised of the possibility of such damages. Rates offered are interbank rates and may not be the same as offered by your financial institution, and do not include commissions. Rates shown on this site will vary from those provided by TorFX or other providers linked to from this site.