The Australian Dollar to US Dollar (AUD/USD) exchange rate has plummeted today as the Federal Open Market Committee (FOMC) minutes released last night supported the performance of the ‘Greenback’ (USD).
The Australian Dollar (AUD) has fallen by -0.9% against the US Dollar (AUD/USD) today and greater losses have been recorded elsewhere as the ‘Aussie’ has flopped overall. The Australian currency has fallen by -0.7% against the New Zealand Dollar (AUD/NZD) but has fared far worse against the Chinese Yuan (AUD/CNY) and the Euro (AUD/EUR), sliding by -1.1% against both currencies.
This bearish behaviour comes partly in response to the FOMC minutes being released. While not overtly positive the Fed was also by no means negative of the current state of the US economy and this overall support has led to mixed US rate hike expectations and general markey volatility. The Australian economy was also not helped by the reaction of Reserve Bank of Australia (RBA) Governor Glenn Stevens, who challenged the Australian parliament by claiming that the Australian economic recovery was being ‘held back’ by a lack of political reform.
The US Dollar (USD) has had a virtually opposite performance to the ‘Aussie’ (AUD), rising against almost all of its rivals following the release of the FOMC minutes after declining initially. The US Dollar rose by 0.4% against the Pound Sterling (USD/GBP) and the Indian Rupee (USD/INR) and saw greater gains of 0.9% against the Australian Dollar (USD/AUD) and the South African Rand (USD/ZAR). In terms of losses, the ‘Greenback’ trended narrowly in the ‘Ninja’ pairing (USD/JPY) and fell by -0.3% against the Swiss Franc, which was uptrending due to rising gold prices.
The FOMC minutes were something of a repeat of the Bank of England (BoE) minutes released earlier this month. Only one member of the committee voted to increase the US interest rate last month and statements for the date of a future rise were positive, if unspecific. The minutes indicated that most committee members ‘judged that the conditions for policy firming had not yet been achieved, but noted that conditions were approaching that point’. The nebulous conditions required for a US rate hike continued to remain unclarified by the policy statement, which showed that only ‘some’ more improvement was needed in labour markets.
The Australian Dollar (AUD) is unlikely to recover against the US Dollar (AUD/USD) today as no further Australian data releases are due and if the predicted drops in the US Continuing and Jobless Claims figures for the beginning of August are accurate, the ‘Greenback’ (USD) is sure to extend its current lead on the ‘Aussie’ (USD/AUD).
The Australian Dollar to US Dollar (AUD/USD) exchange rate was trending in the region of 0.7303 and the US Dollar to Australian Dollar (USD/AUD) exchange rate was trending in the region of 1.3695 today.
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