AUD/USD Exchange Rate Forecast: Climbing Gold Price, China Data Boosts Australian Dollar

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United States Dollar (USD)

The Australian Dollar to US Dollar (AUD/USD) exchange rate posted a modest advance on Tuesday thanks to positive developments at home and abroad.

Australian Dollar to US Dollar (AUD/USD) Exchange Rate Achieves 0.8157.

The Australian Dollar was supported against almost all of its currency counterparts overnight as industry insiders asserted that China will begin speeding through high-value infrastructure projects in order to boost domestic growth.

As China is Australia’s main trading partner, the news was positive for the South Pacific nation and gave the Australian Dollar a leg up.

The Australian Dollar to US Dollar (AUD/USD) exchange rate also advanced as China’s Services and Composite PMI measures (compiled by HSBC) showed stronger-than-forecast growth.

Australia’s trade deficit also widened by less than anticipated in November.

According to one expert; ‘Australia’s trade balance remains deep in the red but November’s report was “better than expected” The news helped refresh the Australian Dollar’s current bounce off lows last seen in 2010. A strong rally in iron ore is helping to support the relief rally but steel stocks suggest the rally will be quite temporary in both iron ore and the Aussie.’

Even further ‘Aussie’ support came in the form of an increase in gold prices as a risk-off trading environment generated demand for the commodity.

During the North American session the US published below forecast ISM Non Manufacturing and Markit Services/Composite figures. However, the data failed to dampen the appeal of the US Dollar too much and the Australian Dollar to US Dollar (AUD/USD) exchange rate came off the day’s highs.

Australian Dollar to US Dollar (AUD/USD) Exchange Rate Forecast

The AiG Performance of Services Index for December could prompt additional AUD/USD exchange rate movement. Given that the measure came in at 43.8 in November, well below the 50 mark separating growth from contraction, investors will be hoping for a more encouraging result this time out.

China’s Westpac MNI Consumer Sentiment Index may also be responsible for AUD/USD fluctuations, but investors will be looking ahead to the day’s influential US reports – including the ADP Employment Change figure, US Trade Balance numbers and (crucially) the publication of the minutes from the latest Federal Open Market Committee meeting.

Hawkish minutes offering some hint as to when interest rates might be increased could see the US Dollar trending higher into Thursday.

The Australian Dollar to US Dollar (AUD/USD) exchange rate was trading in the region of 0.8103 during the European session.

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