Australian Dollar to US Dollar (AUD/USD) Exchange Rate Forecast to Edge Higher despite Improving US Consumer Confidence

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One Hundred United States Dollars (USD)

The Australian Dollar to US Dollar (AUD/USD) exchange rate edged higher by around 0.1% during Tuesday’s European session.

Having declined significantly in the immediate aftermath of China’s equity market crash, the ‘Aussie’ (AUD) recovered some of its losses during Tuesday’s European session. This is despite ongoing weakness in the commodities market, dampened market sentiment and disappointing Australian economic data. The appreciation can be linked to both traders taking advantage of a comparatively weak exchange rate and speculation of a long-term delay to a Federal Reserve benchmark rate hike.

Many analysts forecast ‘Aussie’ depreciation ahead, however, with several downside risks. The obvious close trading ties with China are likely to have a sustained detrimental impact on the Oceanic currency. Iron ore prices are showing no sign of recovery with demand hit by China’s economic slowdown. In addition, speculation regarding a Reserve Bank of Australia (RBA) rate cut to avert a serious economic slowdown should all add up to significantly dampened demand for the South Pacific currency in the medium term.

The Australian Dollar to US Dollar (AUD/USD) exchange rate is currently trending in the region of 0.7183.

US Dollar (USD) Exchange Rate Forecast to Strengthen despite Delayed Fed Rate Hike Bets

The recent developments in China have completely quashed hopes of a September rate hike from the Federal Reserve. This caused the US asset to dive versus its peers despite its safe-haven qualities. However, Tuesday’s European session saw the US Dollar gradually recover in response to better-than-expected domestic data.

Of particular importance in terms of provoking US Dollar appreciation was Consumer Confidence. Augusts’ print came in at 101.5; significantly bettering the median market forecast rise from 90.9 to 93.4. Slightly higher-than-expected Markit Services Output also aided the US Dollar recovery and micrified less impressive results from the Markit Composite PMI and July’s Monthly New Home Sales.

The Australian Dollar to US Dollar (AUD/USD) exchange rate dropped to a low of 0.7162 during Tuesday’s European session.

Australian Dollar to US Dollar (AUD/USD) Exchange Rate Forecast to Hold Gains ahead of Australian Construction Data

Given the absence of further economic data to provoke changes for either currency, the Australian Dollar to US Dollar (AUD/USD) exchange rate is likely to hold gains for the remainder of Tuesday’s European session. The Australasian session is likely to see changes, however, with Australian Consumer Sentiment and Construction Work Done reports due for publication. In terms of US data, Durable Goods Orders has a high potential to cause volatility for the AUD/USD pairing.

The Australian Dollar to US Dollar (AUD/USD) exchange rate reached a high of 0.7250 during Tuesday’s European session.

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