AUD/USD Pushes Higher as Deficit Widens, AUD/GBP Exchange Rate Supported

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United States Dollar (USD)

The Australian Dollar to US Dollar (AUD/USD) exchange rate remained bullish throughout trading on Tuesday, thanks to Australian developments and some below-forecast figures from the United States.

The Australian Dollar advanced on its US peer during the local session as Australian retail sales leapt by 1.2% on the month (defying expectations for an increase of 0.3%) and the Reserve Bank of Australia (RBA) delivered a predictably neutral interest rate announcement.

AUD/USD Gains Recorded after RBA Decision and US Data

The central bank kept rates on hold, as expected, and modestly altered its comments on the detrimental impact of a strong Australian Dollar.

According to economist Michael Blythe; ‘The RBA’s desire for a period of stability has been reinforced in recent months. One key change is that the RBA is now promoting macroprudential measures to take the heat out of the key parts of the housing market. This shift indicates a greater reluctance to use interest rates than we had thought likely.’

The AUD/USD exchange rate held gains into the North American session as demand for the ‘Greenback’ declined in the wake of below forecast trade data.

It had been expected that the US trade deficit would widen slightly in September, increasing from 40.0 billion US Dollars to 40.2 billion US Dollars. However, the deficit actually swelled to 43.2 billion US Dollars due to an easing in export levels.

This, plus a 0.6% decline in US factory orders, left the US Dollar struggling against the Australian Dollar ahead of Friday’s US Non Farm Payrolls report.

The Australian Dollar to US Dollar (AUD/USD) exchange rate is currently trending in the region of 0.8715.

AUD/GBP Exchange Rate Rallies as UK Construction Falters

With the ‘Aussie’ strengthening across the board, the Australian Dollar to Pound Sterling (AUD/GBP) exchange rate was able to push higher over the course of the European session.

The Pound weakened against several of its most traded currency counterparts following the publication of the UK’s Construction PMI.

Given that the nation’s manufacturing gauge surprised to the upside on Monday, investors had been hoping for a similarly uplifting result for the construction sector.

However, the index actually fell short of forecasts, coming in at 61.4 in October – below the 63.5 level forecast and down from September’s 64.2.

The report saw David Noble of the Chartered Institute of Procurement & Supply observe; ‘This month the construction sector maintained an impressive growth trajectory and true grit with continuing strong levels of new business, albeit at a slower pace. Though it appears that the euphoria of the last few months is now settling down to a slightly more modest level of expansion, delivery times continue to lengthen and suppliers of raw materials are in high demand, making the completion of construction projects more challenging and showing how the number of available suppliers has not yet reached pre-recession levels.’

Overnight the AUD/GBP exchange rate could fluctuate in response to the AiG Performance of Services Index and China’s HSBC Services/Composite PMI.

The British Retail Consortium’s Shop Price Index will also be of note to investors with an interest in the Australian Dollar to Pound Sterling exchange rate.

The Australian Dollar to Pound Sterling (AUD/GBP) exchange rate is currently trending in the region of 0.5448.

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