The Australian Dollar to US Dollar (AUD/USD) exchange rate initially advanced on Tuesday as China published stronger-than-expected 4Q GDP data.
The news that the economy of Australia’s largest trading partner grew by more-than-expected in the fourth quarter, coupled with better-than-expected Chinese industrial production/retail sales numbers, gave the Australian Dollar a boost in local trading.
As well as climbing against the US Dollar, the Australian Dollar adopted a stronger position against the Euro (AUD/EUR).
However, as the annual rate of growth in China came in at just 7.4% in 2014 (an almost 25 year low) the ‘Aussie’ went on to shed its initial gains as trading continued.
The Chinese growth data – plus the IMF’s lowering of its global growth forecasts for this year and next – also had an adverse impact on oil prices, a factor which put pressure on the commodity-driven ‘Aussie’.
According to one IMF representative; ‘New factors supporting growth – lower oil prices, but also depreciation of Euro and Yen – are more than offset by persistent negative forces.’
During the North American session, the US NAHB Housing Market Index held at 57 instead of advancing to 58 as expected.
NAHB Chairman Kevin Kelly stated; ‘After seven months above the key 50 benchmark, builder sentiment is reflecting the gradual improvement that is occurring in many markets throughout the nation.’
The report had little effect on US Dollar trading and the North American currency remained trending in a stronger position against the Canadian Dollar, Australian Dollar and Euro.
The Australian Dollar declined against the Pound however as demand for the British currency increased ahead of the release of the UK’s employment figures for the three months through November.
In the hours ahead the Australian Dollar to US Dollar (AUD/USD) exchange rate could fluctuate in response to Australia’s Westpac Consumer Confidence Index for January. In December the gauge fell by -5.7% to 91.1.
Given the continued slide in crude oil and iron ore prices, it is possible sentiment dipped further at the beginning of the year.
Investors will also be looking ahead to the release of US MBA Mortgage Applications, Building Permits and Housing Starts figures.
Positive US data could bolster the ‘Greenback’ and see the AUD/USD pairing slide.
Before the weekend Australia’s Consumer Inflation Expectation report, the US initial jobless/continuing claims figures and the US Markit Manufacturing PMI may all be responsible for additional Australian Dollar to US Dollar exchange rate movement.
The Australian Dollar to US Dollar (AUD/USD) exchange rate was trading in the region of 0.8178 during the European session.
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