The Australian Dollar to US Dollar (AUD/USD) exchange rate advanced to a high of 0.8348 during the North American session, up over 0.5% on the day’s opening levels.
A risk off environment and falling Asian and European stocks increased demand for gold on Wednesday and drove the Australian Dollar higher against peers like the US Dollar.
The US Dollar eased lower across the board as investors turned to safer assets, including gold, the Japanese Yen and the Swiss Franc.
The Australian Dollar was also trending in a stronger position against the Euro and Pound.
According to industry expert Stephen Innes; ‘It’s been a frantic 24 hours in the FX markets. Investors have been profit-taking and reducing heavily weighted long USD positions across the board. The ebb and flow of oil prices is pushing and pulling at commodity-sensitive currencies like the Aussie. Oil prices have risen from a five-year low, and it’s helping the AUD recover lost ground.’
The AUD/USD pairing held on to gains even as the level of Australian consumer confidence fell to a three-year low.
Westpac economist Bill Evans said of the disappointing result; ‘Respondents are clearly concerned about the outlook for the economy and job security. This is a particularly awkward time for respondents to feel so downbeat about purchasing major items given that it comes in the critical lead up to Christmas.’
The fall in consumer confidence followed a slide in business confidence and increases the odds of the Reserve Bank of Australia cutting interest rates next year.
Separate Australian data showed higher-than-forecast growth in Australian home loans.
Home loans rose by 0.3% on the month rather than the 0.1% expected.
China’s inflation data had little impact on the Australian Dollar, despite showing a decline in the pace of consumer price gains.
The Australian Dollar to US Dollar (AUD/USD) exchange rate fell to a low of 0.8260.
The Australian Dollar to US Dollar exchange rate is likely to experience volatility over the next few hours as the US publishes its Monthly Budget Statement and investors focus on Australia’s employment report.
As the Australian unemployment rate is expected to increase from 6.2% to 6.3% in November, the AUD/USD exchange rate could decline during local trading.
However, if Australia is shown to have added more positions than expected last month the Australian Dollar may be boosted.
The Australian Dollar to US Dollar (AUD/USD) exchange rate achieved a high of 0.8348.
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