Overnight the Australian Dollar to US Dollar (AUD/USD) exchange rate fell to an over four-year low as fluctuating commodity prices, the Swiss Gold Referendum and less-than-impressive data from China all took a toll on the ‘Aussie’.
The AUD/USD exchange rate fell to a low of 85.20 during the South Pacific session as the price of crude oil fell below 65 US Dollars a barrel and the Swiss populace voted against the Swiss National Bank holding 20% of its reserves in gold.
The fact that China’s manufacturing PMI was also disappointing kept the Australian Dollar under pressure.
In the view of one industry expert; ‘I think it just goes to show that there’s such pessimism in commodity prices. It’s just tough to be the Aussie Dollar right now until commodities find a base.’
Similarly, HSBC economist Hongbin Qu said of the Chinese data; ‘Today’s data suggest that the manufacturing sector lost momentum and point to weaker economic activity in November. The PBoC’s rate cuts, delivered on the 21st November, will help to stabilise property and manufacturing investment in the coming months. We continue to expect further monetary and fiscal easing measures to offset downside risks to growth.’
These external factors prevented the Australian Dollar from capitalising on an improved domestic Manufacturing PMI.
However, during the North American session the US Dollar shed some of its recent gains amid concerns that its advance may have been too rapid.
As stated by market analyst Joe Manimbo; ‘The Dollar’s broad outperformance this year leaves it vulnerable to profit-taking as the year comes to a close. Underlying fundamentals remain positive and should continue to support it through at least the early stages of next year.’
Overnight the Australian Dollar to US Dollar (AUD/USD) exchange rate could experience fluctuations as a result of the Reserve Bank of Australia’s (RBA’s) interest rate decision. The central bank is expected to leave interest rates on hold.
Australia’s building approvals and current account balance data could also impact AUD/USD trading.
Investors with an interest in the Australian Dollar to US Dollar (AUD/USD) exchange rate will largely be focusing on the US Construction Spending report and the outcome of speeches due to be given by various Federal Reserve officials.
The Australian Dollar to US Dollar (AUD/USD) exchange rate is currently trading in the region of 0.8513.
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