Australian Dollar to US Dollar (AUD/USD) Exchange Rate Forecast to Rally ahead of FOMC

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United States Dollar (USD)

The Australian Dollar to US Dollar (AUD/USD) exchange rate strengthened by around 0.63% during Wednesday’s European session.

Although Australian economic data didn’t print particularly positively, the ‘Aussie’ (AUD) strengthened versus many of its major peers during Wednesday’s European session. The appreciation can be attributed to the hangover from the Reserve Bank of Australia’s (RBA) surprise decision to hold the benchmark interest rate.

The US Dollar, conversely, softened versus many of its major peers ahead of the Federal Open Market Committee (FOMC) minutes from the most recent monetary policy meeting. Given that US data has been printing disappointingly over the past few weeks, speculation that the minutes will read dovishly weighed on demand for the ‘Greenback’ (USD).

The Australian Dollar to US Dollar (AUD/USD) exchange rate is currently trending in the region of 0.7687.

Australian Dollar (AUD) Exchange Rate Strengthens on RBA

The ANZ Roy Morgan Weekly Consumer Confidence Index dropped from 112.3 to 109.7, but the result had minimal impact on the ‘Aussie’. This is partly as a result of a softer US Dollar seeing heightened demand for high-yielding assets.

The main driver behind ‘Aussie’ movement, however, is the hangover from the RBA’s decision to hold the benchmark interest rate. Most expected a cut by 25 basis points as the central bank has complained openly about the overvalued Australian Dollar and its detrimental effect on domestic business growth.

The Australian Dollar to US Dollar (AUD/USD) exchange rate dropped to a low of 0.7633.

US Dollar (USD) Exchange Rate Dives ahead of Fed Minutes

Given that the Federal Reserve highlighted domestic data as the driving force behind cash rate revisions, the recent spate of disappointing data results is likely to be at the forefront of policy maker’s focus. Therefore, many expect the minutes from the most recent FOMC meeting to have dovish overtones.

Aiding the US Dollar downtrend was a disappointing result from MBA Mortgage Applications which showed an increase of only 0.4%, much lower than the 4.6% growth registered previously.

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

With the release of the FOMC minutes, the Australian Dollar to US Dollar (AUD/USD) exchange rate is likely to fluctuate. A stronger US Dollar is also likely to cause the ‘Aussie’ to decline, but a weaker US Dollar will do the opposite.

The Australian Dollar to US Dollar (AUD/USD) exchange rate advanced to a high of 0.7728.

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