The Australian Dollar to US Dollar (AUD/USD) exchange rate softened by around -0.6% during Wednesday’s European session.
In response to disappointing domestic data which saw Australia’s AiG Performance of Services Index drop into contraction territory in October, the Australian Dollar cooled versus many of its currency rivals. Aiding the depreciation was contracting Chinese services output and slower-than-forecast third-quarter Australian Retail Sales ex Inflation. A narrowing of Australia’s trade deficit wasn’t enough to provoke an ‘Aussie’ (AUD) recovery.
Also weighing heavily on demand for the Oceanic currency is speculation that the Reserve Bank of Australia (RBA) will look to ease policy in the near-term with low consumer prices and ‘Aussie’ overvaluation dragging on economic growth. What’s more, today’s positive US data supported hopes for a December Federal Reserve rate lift-off which caused damp demand for the South Pacific asset. This caused gold prices to decline which added additional ‘Aussie’ headwinds.
The Australian Dollar to US Dollar (AUD/USD) exchange rate was trending in the region of 0.7142 during Wednesday’s European session.
After US economic data produced better-than-anticipated results the ‘Greenback’ (USD) rallied versus its currency rivals. October’s ADP Employment Change, which is a good indicator for the outcome of Non-Farm Payrolls, bettered the median market forecast by 2,000. In addition, the ISM Non-Manufacturing Composite climbed to 59.1 in October; bettering the market consensus of a fractional drop from 56.9 to 56.5.
With US labour market conditions showing signs of improvement many rate hawks have brought forward bets regarding a Fed interest rate increase to December. However, some Fed policymakers have already stated that rate changes will be subject to domestic data results so all data in the time leading up to December 16th will be closely scrutinised.
The Australian Dollar to US Dollar (AUD/USD) exchange rate dropped to a low of 0.7134 during Wednesday’s European session.
Given the absence of further Australian economic data to provoke changes, the Australian Dollar to US Dollar (AUD/USD) exchange rate is likely to hold losses during the Australasian session. With that being said, any positive news regarding Chinese stock values could cause ‘Aussie’ appreciation. Thursday’s North American session is likely to see AUD/USD changes with UIS labour market data due for publication.
The Australian Dollar to US Dollar (AUD/USD) exchange rate climbed to a high of 0.7224 during Wednesday’s European session.
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