AUD/USD Exchange Rate Fluctuating after US CPI, Manufacturing PMI

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100 Hundred United States Dollars (USD)

The Australian Dollar to US Dollar (AUD/USD) exchange rate moved between lows of 0.8562 and highs of 0.8625 on Thursday as investors responded to a mixed bag of economic reports for the US.

Overnight the Australian Dollar eased lower as China’s Manufacturing PMI disappointed expectations, undermining demand for higher-risk currencies.

AUD/USD Exchange Rate Declines as China Manufacturing Growth Cools

The gauge of manufacturing for the world’s second largest economy has now fallen right to the 50.0 mark separating growth from contraction.

The AUD/USD exchange rate declined after the report was published, but the pairing went on to experience additional movement following the release of the US Consumer Price Index, jobless claims figures and US Manufacturing PMI.

US CPI Shows Steady Inflation

Today’s US Consumer Price Index showed that the annual pace of consumer price gains stayed at 1.7% in October year-on-year. A decline to 1.6% had been anticipated.

On the month consumer prices stagnated, a dip of -0.1% had been forecast.

Meanwhile, the US Leading Indicators index jumped by 0.9% in October, beating expectations for a 0.6% gain and exceeding the previous month’s negatively revised 0.7% rise.

According to economist Ken Goldstein; ‘The upward trend in the Leading Economic Indicators points to continued economic growth through the holiday season and into early 2015. This is consistent with our outlook for relatively good, but not great, consumer demand over the near term’.

The four-week moving average of initial jobless claims rose modestly in the week ending November 15, but the level remained consistent with solid growth in the labour market.

Separate data showed that US existing home sales jumped by 1.5% in October month-on-month instead of falling by -0.4% as anticipated.

However, US Dollar gains were limited as the US Markit Manufacturing PMI fell from 55.9 to 54.7 in November. Economists had expected an increase to 56.3.

The figure was a ten-month low and was the result of reduced output and softening new order growth.

Markit economist Chris Williamson said this of the result; ‘The manufacturing sector is undergoing a marked slowdown in the fall after enjoying a buoyant summer. Output growth has now fallen for three straight months, taking the pace of expansion down to its lowest since the start of the year. Unlike January, however, this time the weaker rate of growth can’t be blamed on the weather. Export market weakness holds the key to the recent slowdown, with manufacturers reporting the largest drop in export orders for nearly one and a half years.’

Overnight the Australian Dollar to US Dollar (AUD/USD) exchange rate could fluctuate as a result of a speech to be given by the Reserve Bank of Australia’s Alexandra Heath.

Before the weekend investors will also be focusing on another speech, this one given by John Williams of the San Francisco Federal Reserve.

Particularly hawkish or dovish comments from either party could have a notable impact on the AUD/USD exchange rate.

The Australian Dollar to US Dollar (AUD/USD) exchange rate is currently trading in the region of 0.8621.

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