The Australian Dollar to US Dollar (AUD/USD) exchange rate advanced on Wednesday after the US Empire Manufacturing index shrank to 6.90 in March when economists had forecast expansion.
The Empire Manufacturing index, which measures business conditions and expectations of the manufacturing sector in New York, was expected to reach 8.00 in March from February’s 7.78.
The first quarter Empire indexes have been softer and economists have suggested that the weather has been to blame for much of the weakness.
Furthermore, US Industrial Production recorded only +0.1% growth in February, despite economists forecasting +0.2% after January’s -0.3%. In addition, Manufacturing Production tumbled by -0.2% rather than stagnating as predicted.
Economist Guy Berger commented: ‘We’re in a soft patch. The manufacturing sector might perk up a little again. I don’t think too much of this current softness should be extrapolated forward.’
The bad news for the US economy didn’t end there though, the NAHB Housing Market Index dropped from 55 to 53 in March when economists had forecast growth to 56.
Meanwhile, the Australian Dollar could be in for some major movement on Tuesday when the Reserve Bank of Australia (RBA) releases its latest meeting minutes. The RBA recently cut interest rates by 25 basis points and many economists believe that the central bank could potentially cut borrowing costs again in the near future again.
The Australian Dollar to US Dollar (AUD/USD) exchange rate may be in for further fluctuations on Tuesday after the RBA minutes, with US Building Permits and Housing Starts figures also due to emerge.
However, Wednesday will be a major day for US Dollar trading when the Federal Open Market Committee (FOMC) announces its latest interest rate decision. Federal Reserve Chairwoman Janet Yellen will follow-up the announcement with a press conference which could cause major swings in the market.
Friday will see RBA Governor Glenn Stevens make statements at a press conference in Melbourne which could impact ‘Aussie’ trading significantly.
The Australian Dollar to US Dollar (AUD/USD) exchange rate is trading at 0.7658. The US Dollar to Australian Dollar (USD/AUD) exchange rate is trending in the region of 1.3061.
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