The Australian Dollar to US Dollar (AUD/USD) exchange rate was trending within a tight range on Wednesday afternoon.
After data out of China printed positively, the ‘Aussie’ (AUD) strengthened versus many of its major peers. Improving risk sentiment amid higher oil prices also aided the Australian Dollar surge. Slower growth, however, caused the gains to be somewhat laboured.
The US Dollar, meanwhile, strengthened versus the majority of its most traded currency rivals thanks to positive domestic data. With the Federal Reserve stating that rate revisions will be subject to data results, Wednesday’s data will add pressure onto Fed policymakers.
The Australian Dollar to US Dollar (AUD/USD) exchange rate is currently trending in the region of 0.7825.
China’s Services and Composite PMIs registered positive results which caused the ‘Aussie’ to strengthen. The Services PMI rose from 51.8 to 52.0, and the Composite PMI increased from 51.0 to 51.8.
On the year, Australian fourth-quarter Gross Domestic Product met with the median market forecast growth of 2.5%, down from the previous figure of 2.7%. On a quarterly basis, however, growth failed to meet with the market consensus of 0.6%, with the actual result showing growth of 0.5%.
‘The soft growth outcome reflects falling mining investment, weak public spending and a large subtraction to growth from inventories,’ said Felicity Emmett, economist at ANZ Bank. ‘We expect the Reserve Bank of Australia to cut the cash rate by a further 25 basis points in April.’
The Australian Dollar to US Dollar (AUD/USD) exchange rate dropped to a low of 0.7794 today.
US data printed positively on Wednesday which caused the ‘Greenback’ (USD) to surge versus the majority of its most traded currency peers. Of particular significance was the ISM Non-Manufacturing Composite which gained from 56.7 to 56.9 in February despite predictions of a declination.
The ISM report stated; ‘According to the NMI(R), 14 non-manufacturing industries reported growth in February. Comments from respondents have increased in regards to the affects of the reduction in fuel costs and the impact of the West Coast port labour issues on the continuity of supply. Overall, supply managers feel mostly positive about the direction of the economy.’
With the Federal Reserve Beige Book due for publication later on Wednesday evening, there is a high likelihood that the Australian Dollar to US Dollar (AUD/USD) exchange rate will fluctuate. Thursday is likely to see heightened AUD/USD volatility with several data publications pertaining to both nations due.
The Australian Dollar to US Dollar (AUD/USD) exchange rate climbed to a high of 0.7860 today.
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