The Australian Dollar to US Dollar (AUD/USD) exchange rate edged higher on Monday despite general declination in the commodities market.
The US Dollar downtrend is as a result of disappointing domestic data. The Australian Dollar, however, is generally trending lower against its major peers as crude and iron ore prices drop. Quiet markets during the holiday season have seen economic and commodities data less impactful than it would ordinarily be.
The Australian Dollar to US Dollar exchange rate is currently trending in the region of 0.8148.
Although oil prices rose a little today, they are still extremely low by historical standards and with bleak prospects ahead. As a commodity-correlated currency, the ‘Aussie’ (AUD) strengthened as a result of the initial oil price hike. However, the rise in the value of ‘black gold’ was reversed after Saudi Arabia and the United Arab Emirates stated that they intend to continue producing oil at the current rate.
‘In the absence of OPEC removing barrels to balance the market, we see limited support to prices near-term,’ Sabine Schels, commodity strategist at Bank of America Corp., said in a report e-mailed today.
In addition to difficulties in the oil market, iron ore has registered yet more losses. As the world’s foremost exporter, Australia’s asset is closely linked to iron ore price fluctuations.
‘The falling price this year has been far deeper than anyone anticipated,’ Andrew Hodge, an analyst at Wood Mackenzie Ltd. in Sydney, said before today’s prices were released. ‘China has had weaker than expected demand from its own residential property sector. For the big three, they have the lowest cost operations so there’s no reason to stop producing,’ he said, referring to BHP, Rio and Vale.
The Australian Dollar to US Dollar exchange rate has fallen to a low today of 0.8128.
A mixed set of results from US data publications have caused the US Dollar to soften against nearly all of its most traded currency rivals. November’s Chicago Federal Reserve National Activity Index was forecast to decrease from 0.31 to 0.25, but the actual result reached 0.7. Existing Home Sales, however, declined beyond the median market forecast of a drop from 1.4% to -1.1%, with the actual result diving to -6.1%.
Monday’s quiet markets have also had a detrimental effect on the US Dollar. Annette Beacher, head of Asia-Pacific research at TD Securities in Singapore, stated; ‘The whole world expects the US Dollar to pick up, but I think most people have decided to take everything off the table and it’ll be next year’s story now — which is two weeks away. I certainly wouldn’t put anything into day-to-day moves on the 22nd of December.’
With an absence of further data to curb the trend, the Australian Dollar could potentially continue advancing against the US Dollar. However, with markets quiet and data less impactful, the AUD/USD exchange rate is more likely to trend within a narrow range.
The Australian Dollar to US Dollar exchange rate climbed to a high today of 0.8173.
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