The Australian Dollar to US Dollar (AUD/USD) exchange rate was trending in the region of a three-week high on Wednesday as demand for the commodity-driven ‘Aussie’ was supported by US developments.
Less-than-impressive US Durable Goods Orders figures renewed concerns that the pace of US growth slowed in the third quarter of the year and pushed investors away from the US Dollar.
The result also supported bets that the Federal Open Market Committee (FOMC) might not bring its quantitative easing programme to an end tonight. However, even if the FOMC does conclude QE, dovish comments from the Fed could still keep the AUD/USD pairing trending higher.
According to one industry expert; ‘Until [the] FOMC meeting ends, I’d expect most Aussie and Kiwi traders will opt to sit on the sidelines and wait for the show to begin. The market is expecting the Fed to end its bond buying programme and that’s no great secret. Where the interest lies for investors and traders worldwide is ‘will the Fed give any forward guidance on its roadmap for a future interest rate hike?’ It’s that very speculation that could lend support to the Aussie over the short-term’.
The AUD/USD exchange rate achieved a high of 0.8883 during the local session and was little-effected by a softening in two Chinese economic indexes.
The nation’s Leading Index eased from 99.81 to 99.65 while the Westpac MNI Consumer Sentiment measure fell from 113.2 to 110.9.
Westpac’s Huy McKay said this of the result; ‘We have noticed repeatedly that households have been considerably less impressed with the state of the economy than have been manufacturing firms. Taking into account the weak tone of the general data flow over the last quarter or so, with hindsight we can safely claim that the scepticism of the consumer was closer to the mark.’
Although signs of a slowdown in China would ordinarily weigh on the ‘Aussie’, the US developments kept the currency afloat. Considerable AUD/USD volatility could occur later today depending on the tone adopted by the FOMC in its policy statement.
The Australian Dollar to US Dollar (AUD/USD) exchange rate is currently trending in the region of 0.8876.
While the Australian Dollar was trending in a stronger position against the majority of its currency counterparts on Wednesday, the Australian Dollar to New Zealand Dollar (AUD/NZD) exchange rate softened.
The declines in the AUD/NZD pairing were occasioned by the publication of encouraging data from New Zealand.
New Zealand’s gauge of business confidence advanced for the first time in eight months, rallying from 13.4 to 26.5. While this was a considerable improvement, the index is still considerably lower than it was at the beginning of the year.
ANZ economist Cameron Bagrie had this to say of the result; ‘Excluding the bounce in headline business confidence, the remainder of the survey resembles a mouse treadling on the exercise wheel. It looks pretty familiar. […] Agriculture sector confidence is naturally weaker, and more so in dairy-aligned regions, but firms’ own activity expectations remain positive, and employment and investment intentions the same.’
New Zealand’s Activity Outlook also showed improvement, rising from 37 to 37.8.
In the hours ahead further AUD/NZD exchange rate movement could be caused by the Reserve Bank of New Zealand’s interest rate announcement. If the central bank is particularly dovish in tone, the New Zealand Dollar could give up today’s gains against the ‘Aussie’.
The Australian Dollar to New Zealand Dollar (AUD/NZD) exchange rate is currently trending in the region of 1.1173.
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