The Australian Dollar to US Dollar (AUD/USD) exchange rate declined by around -0.6% during Tuesday’s European session.
After economic data revealed that Chinese imports plummeted by more-than-expected, the Australian Dollar dived versus its major peers. On the year, China’s Imports contracted by -20.4%; well beyond the median market forecast -15.9%. Given that a large chunk of China’s imports come from Australia, the poor result highlights the difficulty Australia faces with trade at this time.
China’s poor imports also had a detrimental impact on market sentiment. The data caused global stock markets to halt a 9-day rally, encouraging traders to seek safe-haven assets and avoid high-yielding currencies. As a risk-correlated, high-yielding asset the Australian Dollar dived in response. Even positive domestic data, which saw September’s NAB Business Confidence climb from 1 to 5, wasn’t enough to provoke an ‘Aussie’ (AUD) uptrend.
The Australian Dollar to US Dollar exchange rate was trending in the region of 0.7297 during Tuesday’s European session.
With China’s disappointing trade data causing heightened demand for safe-haven assets, the US Dollar advanced versus many of its peers. Gains were sluggish in the early stages of Tuesday’s European session with uncertainty regarding the timing of a Federal Reserve benchmark rate hike causing subdued trade.
Also aiding the US Dollar uptrend was a hawkish speech from St. Louis Fed President James Bullard. Bullard stated that US economic expansion has gone on for six years and the time is now ripe for a benchmark rate hike. Bullard adds to a number of Fed officials and respected economists calling for a cash rate increase before year end. However, traders seem less optimistic with a recent report showing only 40% of economists surveyed predicted that the Fed would hike before 2016.
The Australian Dollar to US Dollar (AUD/USD) exchange rate dropped to a low of 0.7251 during Tuesday’s European session.
With an absence of further domestic data to provoke changes, the Australian Dollar to US Dollar (AUD/USD) exchange rate is likely to hold losses for the remainder of Tuesday’s European and North American sessions.
Wednesday ought to see heightened AUD/USD volatility with Australian Consumer Confidence, Chinese Consumer Prices and US Advance Retail Sales data likely to have a significant impact.
The Australian Dollar to US Dollar (AUD/USD) exchange rate climbed to a high of 0.7350 during Tuesday’s European session.
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