The Australian Dollar to US Dollar (AUD/USD) exchange rate is likely to experience movement in Wednesday’s North American session as investors await the release of highly influential US ecostats.
The Federal Reserve has intimated on numerous occasions that any upbeat labour market ecostats are likely to encourage the Federal Open Market Committee (FOMC) to increase interest rates. This week will be a big week for labour data with several key items worth noting.
The US ADP Employment Change figure will be closely watched by investors on Wednesday who hope to gain some insight into Friday’s Unemployment Rate and Change in Non-Farm Payrolls data.
It’s highly likely that Friday’s ecostats will be some of the most influential in the market this week with US Dollar fluctuations impacting so many major currencies.
More employment ecostats will also be out on Thursday in the form of US Initial Jobless Claims and Continuing Claims, which could have a moderate impact on the US Dollar to Australian Dollar (USD/AUD) exchange rate.
Obviously Friday will be the most influential day with both payrolls and unemployment figures on the cards and Average Weekly Earnings thrown into the mix.
Furthermore, throughout the rest of the week Federal Reserve officials are scheduled to speak which could cause major US Dollar movement if the topic of interest rate hikes is raised.
Wednesday’s still likely to be majorly eventful with US ISM Manufacturing figures on their way. The reading is expected to slip from 52.9 to 52.5 in March, which could see the US Dollar soften.
Meanwhile, the Australian Dollar has been trending lower as the price of iron ore softens. Iron ore has the potential to drop below $50 US Dollars as demand dies down.
Westpac is forecasting a tumble to $47 US Dollars per tonne before returning to around $69 in 2016.
Westpac economist Justin Smirk commented: ‘It is very unlikely that 2015 will bring much joy for spot iron ore prices. For the near term Australia and Brazil will continue to expand production, even at current prices, maintaining downwards pressure.’
A slowdown in China is largely accountable for softer iron ore prices as well as the continually forming global glut.
Smirk continued: ‘The market is focusing on the large supply of cheap ore coming out of Australia and, for now, this is defining the market.’
‘Thus a dip down through $50 per tonne is very likely and we have pencilled in a monthly low of $47 per tonne sometime in the second half of this year with a quarterly average low of $50 per tonne in the December quarter.’
Additionally, the prospect of a Reserve Bank of Australia (RBA) rate cut could force the ‘Aussie’ exchange rate lower at any moment if any dovish comments emerge.
The US Dollar to Australian Dollar (USD/AUD) exchange rate is trading at 1.3121. The Australian Dollar to US Dollar (AUD/USD) exchange rate is trending in the region of 0.7622.
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