Australian Dollar to US Dollar (AUD/USD) Exchange Rate Forecast to Surge on Market Sentiment

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United States Dollars (USD)

The Australian Dollar to US Dollar (AUD/USD) exchange rate strengthened by around 0.86% on Thursday afternoon.

After Australian economic data printed well above expectations, the Australian Dollar strengthened across the board. Compounding the ‘Aussie’ (AUD) appreciation was a report from OPEC which forecast US supply growth to cool.

The US Dollar softened fractionally after the recent surge was seemingly unjustified. This was evidenced by the most recent retail sales data, which saw sales in December decline beyond expectations. Yet more disappointing domestic labour market data on Thursday is weighing on Dollar demand.

The Australian Dollar to US Dollar (AUD/USD) exchange rate is currently trending in the region of 0.8221.

Australian Dollar (AUD) Exchange Rate Strengthens on Domestic Data

In the wake of much better-than-anticipated Australian labour market data, the ‘Aussie’ advanced against all 16 of its most traded peers. Employment Change was forecast to add 5,000 new jobs in December after having added 45,000 positions previously, but the actual result saw a further 37,400 jobs added. In addition, Unemployment Rate positively declined from 6.2% to 6.1%, despite the median market forecast of a rise to 6.3%.

‘We are more wary than usual of the labour force data given recent measurement problems, but three solid monthly gains are hard to ignore and even harder to ignore is the dip in the unemployment rate,’ Michael Turner, a strategist at Royal Bank of Canada in Sydney, said in a research note.

Aiding the ‘Aussie’ uptrend is rising oil prices after OPEC forecast US supply growth to cool. This improved market sentiment and saw increased demand for the high-yielding Australian Dollar. However, most experts agree that oil prices are likely to resume declination.

‘When the market extends itself too far, we’ll see some short-covering rally, and when the pressure evaporates, we’ll continue to see prices moving lower,’ said Gene McGillian, a senior analyst at Tradition Energy in Stamford, Connecticut. ‘That’s what we are witnessing now.’

The Australian Dollar to US Dollar (AUD/USD) exchange rate dropped to a low today of 0.8130.

US Dollar (USD) Exchange Rate Edges Lower on Unjustified Gains

After having strengthened considerably amid speculation the Federal Reserve will hike rates in the near-future, the US Dollar softened on Thursday against most of its peers as the surge was seen as unwarranted. This is especially true given the most recent retail sales data declined beyond expectations.

Thursday’s US data also printed disappointingly, further compounding anxieties regarding unjustified gains. Continuing Claims was forecast to drop from 2,475,000 to 2,400,000, but the actual result only fell to 2,424,000. In addition, Initial Jobless Claims was expected to drop from 297,000 to 290,000, but the actual data showed claims rose to 316,000.

‘This latest reading is one of the highest figures reported over the past half year and it is difficult to know at this point if this represents noise in the weekly series—which is often very volatile around the turn of the year—or a more meaningful softening in labour market conditions,’ Daniel Silver, economist at J.P. Morgan Chase, said in a note to clients.

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

With a complete absence of domestic data to curb the trend, the Australian Dollar to US Dollar (AUD/USD) exchange rate is likely to trend higher or hold its position of strength.

The Australian Dollar to US Dollar (AUD/USD) exchange rate climbed to a high today of 0.8295.

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