AUD/USD Exchange Rate Forecast: Australian Dollar Falls by 0.4% after US Industrial Production Data

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United States Dollar (USD)

The Australian Dollar to US Dollar (AUD/USD) exchange rate fell by 0.4% on Monday as a variety of factors weighed on the Australian Dollar.

The South Pacific currency initially came under pressure as a result of falling oil prices, but further losses were recorded after news broke that an armed man had taken several people hostage in a cafe in Sydney’s financial district.

Although a number of the hostages have escaped, the gunman still has several people under control in the Lindt cafe. A black Islamic flag has been displayed in the window of the establishment and it has been confirmed that the man is Iranian.

The Australian Dollar to US Dollar (AUD/USD) exchange rate fell to a fresh multi-year low during the local session and industry expert David de Ferranti noted; ‘It was expected to be a low-volume Monday with little in the way of data to move the market, so the volume spike in trading around the siege was noticeable.’

Although the ‘Aussie’ later recovered much of the siege related declines, Chinese growth concerns also had a negative impact on the Australian Dollar.

While it is expected that China’s statistics bureau will make upward revisions to domestic growth projections for 2013 and 2014, there are serious worries that one of the world’s largest economies will disintegrate without further stimulus support from the People’s Bank of China.

Australian Dollar to US Dollar (AUD/USD) Exchange Rate Falls after US Reports

The Australian Dollar to US Dollar (AUD/USD) exchange rate extended and consolidated declines during the European session as the US industrial production report surprised to the upside.

Industrial production was expected to increase by 0.7% on the month in November but it actually jumped 1.3%. Similarly, manufacturing production rose by 1.1% rather than the 0.5% anticipated.

It wasn’t all good news for the US however as the nation’s NAHB Housing Market Index fell from 58 to 57 in December rather than increasing to 59 as expected.

AUD/USD Exchange Rate Forecast

During the local session, considerable AUD/USD exchange rate volatility could be occasioned by the publication of minutes from the Reserve Bank of Australia’s latest policy meeting.

If the minutes increase the odds of the RBA introducing an interest rate cut in 2015 the Australian Dollar could slide.

Investors will also be taking an interest in the ANZ Roy Morgan Consumer Confidence Index and China’s HSBC Manufacturing PMI.

The Australian Dollar to US Dollar (AUD/USD) exchange rate was trading in the region of 0.8208 during the European session.

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