Australian Dollar to US Dollar (AUD/USD) Exchange Rate Forecast to Rally after RBA Rate Hold

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United States Dollar (USD)

The Australian Dollar to US Dollar (AUD/USD) exchange rate rallied by around 1.77% during Tuesday’s Australasian session.

After the Reserve Bank of Australia (RBA) avoided cutting the benchmark interest rate, the Australian Dollar advanced versus most of its major peers. The appreciation was aided by a softer US Dollar and improved market sentiment.

The US Dollar, meanwhile, softened across the board after domestic data failed to impress. Adding downwards pressure was a dovish statement from Federal Reserve board member Lael Brainard who stated that a benchmark rate increase is still quite far off.

The Australian Dollar to US Dollar (AUD/USD) exchange rate is currently trending in the region of 0.7748.

Australian Dollar (AUD) Exchange Rate Rallies across the Board after RBA Avoid Intervention

Despite the fact that most economists predicted that the RBA would hold the lending rate, the decision was still met with enthusiasm and the ‘Aussie’ (AUD) rallied in response. However, accompanied statements from RBA officials intimated that the door was still open for future easing if the Oceanic currency remains resiliently overvalued.

A statement from governor Glenn Stevens concluded that; ‘Having eased monetary policy last month, the Board today judged that leaving the cash rate unchanged was appropriate at this meeting. Information on economic and financial conditions to be received over the period ahead will inform the Board’s assessment of the outlook and hence whether the current stance of policy will most effectively foster sustainable growth and inflation consistent with the target.’

The Australian Dollar to US Dollar (AUD/USD) exchange rate dropped to a low of 0.7609 during Tuesday’s European session.

US Dollar (USD) Exchange Rate Forecast to Dive versus the ‘Aussie’ on Brainard Comments

US economic data produced poor results on Tuesday which initiated a US Dollar downtrend. Of particular disappointment was April’s Factory Orders which declined by -0.4% on the month; a larger declination than the median market forecast -0.1%. However, the ‘Greenback’ (USD) depreciation can be mostly linked to dovish comments made by Fed policymaker Lael Brainard.

‘There is value to watchful waiting while additional data help clarify the economy’s underlying momentum,’ Brainard said at the Center for Strategic and International Studies in Washington. ‘If continued labour market strengthening is confirmed and inflation readings continue to improve, liftoff could come before the end of the year.’ She added; ‘It would be difficult, based on the data available today, to dismiss the possibility of a more significant drag on the economy than anticipated from foreign crosscurrents and the negative effects of the oil price decline, along with a more cautious US consumer.’

Australian Dollar to US Dollar (AUD/USD) Exchange Rate Forecast to Hold Gains

Given the absence of further domestic data publications to provoke volatility, and with the ‘Aussie’ holding a significant gain over its North American counterpart, the Australian Dollar to US Dollar (AUD/USD) exchange rate is likely to hold the advance for the remainder of Tuesday’s European session.

Wednesday’s Australasian session will be significant for the AUD/EUR pairing with Australian growth data due for publication.

The Australian Dollar to US Dollar (AUD/USD) exchange rate climbed to a high of 0.7769 during Tuesday’s European session.

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