Australian Dollar to US Dollar (AUD/USD) Exchange Rate Forecast to Rally as FOMC Enters Two-Day Policy Decision

  • Posted on

United States Dollar (USD)

The Australian Dollar to US Dollar (AUD/USD) exchange rate advanced by around 0.9% during Wednesday’s European session.

‘Aussie’ (AUD) Gains after China’s Equity Market Rose

China’s equity market ended the Asian session up for the first time in three days, causing market sentiment to improve. The Shanghai Composite Index ended the session 4.9% higher, all gains coming in the final hour of trade.

As a risk-correlated asset, the Australian Dollar rallied versus its major peers in response. The gains, coming in the last hour, suggest more intervention from Beijing. However, given that the vast amounts the Chinese government has pumped into the equity market have not been enough to sustain a recovery, many fear that Beijing is just throwing money into a growing black hole.

Australian Dollar Gains on Weak US Dollar (AUD/USD) Today

After US economic data showed inflation dipped unexpectedly, the US Dollar softened versus its major peers. This supported demand for the high-yielding ‘Aussie’. In addition, the US Dollar downtrend allowed gold prices to strengthen, which is Australian Dollar supportive.

Saxo Bank’s head of commodity research, Ole Hansen, stated; ‘I see three options: no change, rate hike with a hawkish statement or rate hike with a dovish statement,’ he said. ‘The first two will be gold negative while the last (which is my preferred option) could trigger a recovery as it removes the uncertainty and should keep the Dollar from rising too fast.’

US Dollar Conversion Rate Broadly Declines ahead of FOMC Decision

As described above, the US Dollar declined versus most of its major peers after inflation data disappointed. Although many experts have stated that drop in inflation will not affect the Federal Open Market Committee (FOMC) decision, it certainly doesn’t add any pressure for a rate hike. Should the Federal Reserve opt to hold the cash rate after the two-day meeting concludes, the Australian Dollar is likely to surge. With that being said, if the accompanying statement from Fed Chair Janet Yellen is hawkish in tone, ‘Aussie’ gains could be tempered.

Australian Dollar to US Dollar (AUD/USD) Exchange Rate Forecast to Fluctuate ahead of Fed Interest Rate Decision

With so much uncertainty and divided opinion in the run up to the Federal Reserve interest rate announcement on Thursday, there is a high potential for Australian Dollar to US Dollar (AUD/USD) exchange rate fluctuation. Australia’s economic data is unlikely to be particularly impactful, and similarly US data is likely to be overshadowed by traders awaiting the FOMC decision.

The Australian Dollar to US Dollar (AUD/USD) exchange rate was trending within the range of 0.7119 to 0.7197 during Wednesday’s European session.

« Previous Story

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

Next Story »

Australian Dollar to US Dollar (AUD/USD) Exchange Rate Forecast: Dovish FOMC Shores up ‘Aussie’ as Risk Appetite Increases


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.