Australian Dollar to US Dollar (AUD/USD) Exchange Rate Weakens Ahead of Fed Minutes

  • Posted on

United States Dollars (USD)

The Australian Dollar to US Dollar (AUD/USD) exchange rate fell to a new four-and-a-half year low as fears grow that Russia could dump a number of commodities such as gold onto global markets as it tries to raise cash needed to shore up its finances.

Also weighing heavily on the ‘Aussie’ are expectations that this evenings US Federal Reserve policy minutes release will show that policy makers are getting closer to raising interest rates and will alter their forward guidance.

Any signs from the Fed that an interest rate rise is likely next year will put further pressure on the Australian Dollar.

Tumbling oil prices have had a dramatic impact on oil producing nations. Russia has been particularly badly hit as its economy struggles under the weight of western imposed economic sanctions and the fall in value of its most exported commodity.

The Russian Ruble has fallen to record lows against most major currencies and an attempt by the Russian central bank to halt the slide failed. In desperation, the central bank raised interest rates from 10.5% to 17%.

The interest rate shift will come at a considerable cost, as it will raise borrowing costs for businesses and consumers. The Russian economy was already expected to plunge into recession early next year because of falling oil and gas prices and sanctions

‘We are in the midst of a full-blown Russian economic crisis caused by the collapse in oil prices. With industrial commodity prices remaining under pressure this week and the Russian economic crisis causing rising risk aversion, it’s no surprise the Australian Dollar remains weak,’ said Robert Rennie, chief currency strategist at Westpac.

The US Dollar meanwhile continued to trade higher against the ‘Aussie’ despite data showing that US consumer inflation made its largest decline in six years in November due to the falling oil prices. The data did little to alter economist expectations that the Federal Reserve will begin raising interest rates by the middle of next year.

The Washington based Labour Department said that its Consumer Price Index fell by 0.3%, the biggest decline seen since December 2008. On an annual basis the index increased by 1.3%, the smallest gain since February. Economists had been expecting a monthly decline of 0.1% and an annual rise of 1.4%.

The AUD/USD exchange rate is likely to experience further volatility in tomorrow’s session as the Reserve Bank of Australia releases its latest bulletin and the US releases its latest jobless claims and service PMI data.

« Previous Story

AUD/USD Exchange Rate Forecast: Australian Dollar Recoups Losses as US Data Disappoints

Next Story »

Australian Dollar to US Dollar (AUD/USD) Exchange Rate Edges Higher on US Data


Disclaimer: Currency-Converter.com.au and its data provider, TorFX, make no claims regarding the validity or exactness of the information provided in on this site and will not be held liable for any use, interpretation, or other implementation of the information provided. Currency-converter.com.au make no warranties, express or implied, as to results to be obtained from use of such information, and make no express or implied warranties of condition, quality, performance, merchantability or fitness for a particular purpose or use. Currency-converter.com.au shall not have any liability for the accuracy of the information contained in the services provided or ommissions there in which are made available on a free, as-is basis. None of the aforementioned parties shall be liable for any third party claims or losses of any nature, including, but not limited to, lost profits, punitive, consequential, special, incidental, indirect or similar damages even if advised of the possibility of such damages. Rates offered are interbank rates and may not be the same as offered by your financial institution, and do not include commissions. Rates shown on this site will vary from those provided by TorFX or other providers linked to from this site.