The Australian Dollar to US Dollar (AUD/USD) exchange rate dropped to a low of 0.8645 on Friday.
While the ‘Aussie’ had recouped the losses sustained on the back of this week’s currency market intervention comments, the AUD/USD pairing fell in response to better-than-expected US data.
With both US retail sales and confidence data surpassing expectations, the odds of the Federal Reserve increasing interest rates earlier rather than later next year increased and demand for higher-risk assets like the ‘Aussie’ waned.
After declining by -0.3% in September retail sales were expected to increase 0.2% in October.
Sales actually rallied by 0.3% however as softer oil prices improved consumer’s spending power.
Retail sales less autos also rose by 0.3%.
This positive report was followed by the University of Michigan Confidence index. It had been expected that the measure of sentiment would advance from 86.9 in October to 87.5 in November.
The jump to 89.4 was therefore a positive surprise and the US Dollar was bolstered accordingly. The reading was the strongest since before the global economic crisis.
The Australian Dollar to US Dollar (AUD/USD) exchange rate is likely to experience notable fluctuations next week, especially given the fact that minutes from the recent Reserve Bank of Australia and Federal Open Market Committee meetings are due for publication.
If the RBA jawbones the Australian Dollar or if the FOMC minutes are hawkish the AUD/USD exchange rate could decline.
The Australian Dollar to US Dollar (AUD/USD) exchange rate achieved a high of 0.8726.
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