Australian Dollar to US Dollar (AUD/USD) Exchange Rate Forecast to Fluctuate on US Retail Sales and Inflation

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The Australian Dollar to US Dollar (AUD/USD) exchange rate was trending lower on Tuesday after Atlanta US Federal Reserve President Dennis Lockhart suggested that US growth will continue strongly, with the first rate hike taking place in mid-2015.

The US Dollar has been trending higher against other currency majors as investors hedge their bets that a rate hike in the US economy is likely to occur in the near future.

Lockhart inspired optimism in the US economic recovery after investor sentiment in the ‘Buck’ waned recently on the release of weaker US ecostats.

Lockhart suggested that the US economy ‘is hitting on all cylinders. The recovery that began in 2009 is well-advanced.’

Lockhart continued: ‘There was more improvement in labour markets in 2014 than in any other year of the recovery. [Consumers] seem to be more prepared to open their pocketbooks.’

After the latest Federal Open Market Committee (FOMC) statement announced that policymakers would exert ‘patience’ before hiking rates, the comments by Lockhart are quite hawkish.

Wage data has been a hot topic in the market since average earnings were shown to have fallen by -0.2%, but Lockhart suggests that wage growth is going to pickup in the near future.

Lockhart stated: ‘I would really expect that over the next half year to three quarters of a year we would expect to see some pickup in wage data. There is a lot of noise in the wage data. It is going to take a few more months.’

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

Australian Dollar to US Dollar (AUD/USD) exchange rate volatility can be expected this week with the release of some highly influential data ahead.

Wednesday will see the US Advance Retail Sales figure published. Contraction of -0.1% in December is expected. If the retail sector does register contraction, it’s highly possible the Australian Dollar to US Dollar (AUD/USD) exchange rate could gain.

Meanwhile, Thursday sees the publication of Australian Employment Change and Unemployment Rate stats. The Unemployment Rate is expected to remain at 6.3% after Employment Change figures show 5.0K jobs were created in December. The 5.0K forecast is relatively small after November’s 42.7K gain.

Friday could also be a busy day for the Australian Dollar to US Dollar (AUD/USD) exchange rate with the release of the US Consumer Price Index (CPI). Inflation in the US is expected to dip from 1.3% to 0.7% in December—a development that could see the US Dollar decline.

The Australian Dollar to US Dollar (AUD/USD) exchange rate is presently residing at 0.8143. The US Dollar to Australian Dollar (USD/AUD) exchange rate is trending in the region of 1.2282.

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