The Australian Dollar to US Dollar (AUD/USD) exchange rate cooled by around -0.2% during Thursday’s European session.
During the Australasian session, the South Pacific asset declined in response to speculation that the Federal Reserve will look to hike the cash rate in December. As a risk-correlated asset, the resultant US Dollar gains following the hawkish Federal Open Market Committee (FOMC) statement caused the Australian Dollar to tumble. A significant drop in iron ore prices also weighed on demand for the Australian asset given that it’s the foremost exported commodity from the antipodean nation.
Adding to the Australian Dollar downtrend was less-than-ideal domestic data. On the month, September’s HIA New Home Sales contracted by -4.0%, highlighting the difficulty first-time buyers are facing amid the current housing bubble. ‘A fresh record level of building activity during this financial year could have been achieved — and could have been of strong benefit to the broader domestic economy — but increasingly restrictive credit conditions are likely to curtail the boom in new home building,’ said Housing Industry Association economist Diwa Hopkins.
The Australian Dollar to US Dollar (AUD/USD) exchange rate was trending in the region of 0.7067 to 0.7119 during Thursday’s European session.
In spite of the fact that US data produced mostly disappointing results on Thursday, the UIS asset is likely to hold gains versus the Australian Dollar. This is mainly due to the fact that the hawkish statement from FOMC policymakers supports bets of a December rate hike, with growth still robust enough to accommodate tighter policy.
However, US Gross Domestic Product missed estimates in the third-quarter of 1.6% growth, with the actual result only showing 1.5% growth. Additional US Dollar weakness can be attributed to disappointing results from Personal Consumption and Pending Home Sales data.
‘Growth over the next year should be around 2.5 per cent at an annual rate, strong enough to reduce excess capacity and allow for a further reduction in labour market slack,’ said Stuart Hoffman, chief economist at PNC Financial Services.
The Australian Dollar to US Dollar (AUD/USD) exchange rate dropped to a low of 0.7067 during Thursday’s European session.
With iron ore prices showing little sign of a return to upside pressure, and with Asian stock volatility weighing on risk-appetite, the Australian Dollar to US Dollar (AUD/USD) exchange rate is likely to soften in the long-term. Friday should see heightened AUD/USD volatility with US wages data and Australian Producer Price Index data due for publication.
The Australian Dollar to US Dollar (AUD/USD) exchange rate was trending within the range of 0.7067 to 0.7119 during Thursday’s European session.
Disclaimer: Currency-Converter.com.au and its data provider, TorFX, make no claims regarding the validity or exactness of the information provided in on this site and will not be held liable for any use, interpretation, or other implementation of the information provided. Currency-converter.com.au make no warranties, express or implied, as to results to be obtained from use of such information, and make no express or implied warranties of condition, quality, performance, merchantability or fitness for a particular purpose or use. Currency-converter.com.au shall not have any liability for the accuracy of the information contained in the services provided or ommissions there in which are made available on a free, as-is basis. None of the aforementioned parties shall be liable for any third party claims or losses of any nature, including, but not limited to, lost profits, punitive, consequential, special, incidental, indirect or similar damages even if advised of the possibility of such damages. Rates offered are interbank rates and may not be the same as offered by your financial institution, and do not include commissions. Rates shown on this site will vary from those provided by TorFX or other providers linked to from this site.