Australian Dollar to US Dollar (AUD/USD) Exchange Rate Forecast to Strengthen on Poor US Data

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United States Dollar (USD)

The Australian Dollar to US Dollar (AUD/USD) exchange rate strengthened by around 0.22% on Friday afternoon.

After US confidence data printed below expectations on Friday, the US Dollar softened versus the majority of its most traded currency rivals.

Speculation that the recent succession of disappointing domestic data results will cause the Federal Reserve to delay a rate hike compounded negative sentiment towards the North American asset.

The Australian Dollar, meanwhile, strengthened versus the majority of its most traded currency competitors thanks to improved risk appetite.

The softer US Dollar caused oil prices to rise beyond $60 a barrel for the first time in 2015 which heightened demand for the Australian Dollar’s high-yielding potential.

The Australian Dollar to US Dollar (AUD/USD) exchange rate is currently trending in the region of 0.7774.

Australian Dollar (AUD) Exchange Rate Gains on Oil Prices

As explained above, the steep rise in oil prices caused trader risk appetite to improve significantly.

The ‘Aussie’ (AUD), as a commodity-correlated currency, strengthened as a result. ‘The strength of the oil prices is puzzling, for there is still a considerable oversupply on the oil market, as reflected in rapidly growing U.S. stocks,’ analysts at Commerzbank said in a note to clients. ‘The rising prices are thus more likely to be related to the expectation that the oil supply will grow less sharply in the coming months, particularly in the U.S.’

The gains have been sluggish, however, thanks to comments by Reserve Bank of Australia (RBA) Governor Glenn Stevens who stated that he fears that policy easing will have minimal impact. ‘The board is … very conscious of the possibility that monetary policy’s power to summon up additional growth in demand could, at these levels of interest rates, be less than it was in the past,’ Mr Stevens said.

The Australian Dollar to US Dollar (AUD/USD) exchange rate dropped to a low today of 0.7721.

US Dollar (USD) Exchange Rate Dives on Consumer Confidence

After yet more domestic data printed disappointingly, the US Dollar softened versus nearly all of its major peers. The University of Michigan Confidence was forecast to hold at 98.1, but the actual result dropped to 93.6.

‘Low gas prices have especially helped lower-income households, although consumers now widely anticipate that gas prices will edge upward during the year ahead,’ Richard Curtin, director of the Michigan Survey of Consumers, said in a statement.

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

Given the lack of data to drive changes, the Australian Dollar to US Dollar (AUD/USD) exchange rate is likely to hold gains for the remainder of Friday. Fluctuations in commodities may have an effect over the weekend, however.

The Australian Dollar to US Dollar (AUD/USD) exchange rate climbed to a high of 0.7793.

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