The Australian Dollar to US Dollar (AUD/USD) exchange rate declined by around -0.57% on Monday afternoon.
After oil prices dropped with no bottom in sight, market sentiment dampened, causing high-yielding assets to slump. The Australian Dollar, as a risk-correlated currency, softened due to trader risk-aversion strategies. Compounding the declination was a set of less-than-ideal domestic data publications.
The US Dollar, meanwhile, is holding gains despite fears that the Federal Reserve will delay rate revisions until labour market data improves significantly.
The Australian Dollar to US Dollar (AUD/USD) exchange rate dropped to a low today of 0.8127.
As explained above, with market sentiment significantly dampened amid declination in oil prices, the Australian Dollar slumped versus most of its major peers. ‘To keep all capital sidelined and curtail investment in shale until the market has re-balanced, we believe prices need to stay lower for longer,’ said Goldman analysts including Jeffrey Currie in New York. ‘The search for a new equilibrium in oil markets continues.’
In addition to oil prices causing an ‘Aussie’ (AUD) declination, domestic data printed poorly on Monday. Home Loans were forecast to appreciate from 0.2% to 1.7%, but the actual result declined to -0.7%. Investment Lending also dropped from 0.5% to -2.2%.
The Australian Dollar to US Dollar (AUD/USD) exchange rate dropped to a low today of 0.8255.
After US labour market data printed disappointingly last week, the US Dollar softened against its major peers as a result of traders speculating a delay to monetary policy normalisation. However, with policy divergence between the Federal Reserve and the European Central Bank has seen the US Dollar avoid considerable declination.
Minutes from the Fed’s latest meeting, released last week, reiterated that policy makers are unlikely to raise rates for ‘at least the next couple of meetings.’
Australian Dollar to US Dollar (AUD/USD) Exchange Rate Forecast to Decline
Given the lack of data to curb the trend, the Australian Dollar to US Dollar (AUD/USD) exchange rate is likely to continue trending lower on Monday.
The Australian Dollar to US Dollar (AUD/USD) exchange rate climbed to a high today of 0.8255.
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