The Australian Dollar to US Dollar (AUD/USD) exchange rate advanced by around 0.3% in the early stages of Friday’s European session.
After the Shanghai Composite Index ended the Asian session higher for the second-day on a post-holiday rally, market sentiment improved significantly. This caused the Australian Dollar to advance versus its major peers. Rising gold and iron ore prices also aided Australian Dollar gains.
After having risen by 3.0% on Thursday, China’s equity market ended Friday’s session 1.3% higher. The signs of stability have been attributed to a post-holiday rally after the index was closed for five days. Beijing was required to intervene in order to stimulate stock growth but the impact of this prior to the break in trade has been proven to be temporary.
One thing that has really supported confidence in China’s economic stability was the publication of minutes from the most recent Federal Reserve interest rate decision. The minutes suggested that policymakers would hold off raising rates until China’s recovery is robust enough to withstand it.
This means that the Chinese government has more time to stimulate a recovery, which has had a positive impact on market sentiment and boosted demand for the ‘Aussie’ (AUD).
The Australian Dollar to US Dollar (AUD/USD) exchange rate was trending in the region of 0.7286 during Friday’s London session.
The dovish Federal Reserve minutes had a detrimental impact on demand for the US Dollar. Policymakers were happy with the state of the domestic economy, but slowing global growth was a significant hurdle in the way of raising rates. Adding to dampened investor confidence with regards to the likelihood of a 2015 rate lift-off was the fact that these minutes pertain to a meeting which preceded a number of disappointing domestic data publications.
With labour market conditions faltering and the International Monetary Fund (IMF) lowering growth forecasts, many traders expect the Fed to delay a benchmark rate hike for a long time to come.
Today’s US economic data is unlikely to be hugely impactful. Wholesale Inventories and Wholesale Trade Sales may provoke US Dollar changes, but damp sentiment is likely to dominate trader focus.
Later today, Federal Reserve Bank of Atlanta President Dennis Lockhart will be giving a speech. Lockhart previously championed the notion of a 2015 rate hike, so it will be interesting to see how he has responded to the recent set of poor domestic data results. Even if he reaffirms his stance that the Fed will hike the cash rate this year, it is doubtful that investors will share in his confidence.
The Australian Dollar to US Dollar (AUD/USD) exchange rate dropped to a low of 0.7256 during Friday’s European session.
With US data yet to be published on Friday, there is the potential for AUD/USD volatility. However, with investor confidence weakened by the FOMC minutes, the Australian Dollar to US Dollar exchange rate is likely to hold gains for the remainder of Friday’s European session. Sunday could see ‘Aussie’ volatility with the publication of China’s Aggregate Financing and New Yuan Loans data.
Next week’s focus for the AUD/USD exchange rate will likely be Thursday’s economic docket. Australian Employment Change and Unemployment Rate will be highly significant for those invested in the South Pacific asset. The US Consumer Price Index will also be of considerable importance for US Dollar traders, especially considering inflation is forecast to drop to -0.2% in September.
The Australian Dollar to US Dollar (AUD/USD) exchange rate climbed to a high of 0.7306 during Friday’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.