The Australian Dollar to US Dollar (AUD/USD) exchange rate advanced by over 0.25% on Thursday to achieve a high of 0.8764.
Although the ‘Aussie’ softened overnight in response to comments issued by a high-profile Reserve Bank of Australia official, the South Pacific asset recouped losses over the course of the European session.
Christopher Kent, Deputy Governor of the RBA, undermined demand for the Australian Dollar when he implied that the central bank is prepared to intervene in the currency market if it deems the strength of the ‘Aussie’ to be detrimental to the domestic economy.
The comment saw the Australian Dollar post modest declines against several of its major rivals, but the movement was fairly inconsequential.
According to the Sydney Morning Herald; ‘RBA Assistant Governor Christopher Kent may have scared a few traders by not ruling out an intervention to bring down the Dollar, but few see it happening anytime soon.’
However, the AUD/USD exchange rate rallied after the US Dollar softened in response to comments issued by another key central bank figure.
William Dudley of the Federal Reserve Bank of New York caused ‘Greenback’ weakness when he intimated that markets shouldn’t expect a US interest rate hike before the second half of next year.
Dudley’s remarks prompted this response from forex strategist Jonathan Webb; ‘Dudley is known to be on the dovish side, he does tell you the Fed is in no hurry to raise rates. The economic outperformance is the key driver, meaning the Dollar can still strengthen.’
The recent run of positive US figures had seen traders pricing in a rate increase in the spring.
Further US Dollar losses were recorded after the US initial jobless and continuing claims figures came in higher than expected. It had been forecast that the number of people applying for unemployment benefits would increase, but the gain was stronger than anticipated.
A lack of economic data for Australia is likely to restrain AUD/USD movement during the Australasian session. However, notable movement could occur before the weekend following the publication of the US Advance Retail Sales report.
If retail sales increase by more than forecast, the US Dollar could push higher.
The Australian Dollar to US Dollar (AUD/USD) exchange rate achieved a high of 0.8764.
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