Australian Dollar to US Dollar Exchange Rate Struggles to Hold Highs as Trade Jitters Persist
Despite some strong Australian data this week, the Australian Dollar to US Dollar (AUD/USD) exchange rate has been unable to sustain any gains. Instead, investors are mixed on both currencies.
Concerns about Chinese retaliation to US trade tariff plans caused AUD/USD to slip from 0.7698 to 0.7681 last week, but the pair’s movement has been tighter since Monday amid mixed trade.
So far this week, AUD/USD has fluctuated between lows of 0.7652 and highs of 0.7725. The pair trended near the week’s opening levels during Thursday’s European session.
The Australian Dollar (AUD) has been unable to benefit notably against the US Dollar (USD) from hopes that trade tensions between the US and China could be settled through talks, as the US Dollar has been more appealing from this news too.
With US trade stance developments influencing both the Australian Dollar and US Dollar, the direction of AUD/USD trade has been driven more by domestic news.
Australian Dollar (AUD) Exchange Rates Supported by Retail and Services Stats
The Australian Dollar has finally found some stronger domestic support this week, in the form of impressive Australian ecostats.
Wednesday saw the publication of Australia’s February retail sales stats, which came in twice as high as expected.
Retail sales were forecast to have risen from 0.1% to 0.3%, but they instead jumped from a revised 0.2% to 0.6% month-on-month.
Thursday followed with Australia’s March services PMI from AiG, which improved from 54.0 to a strong 56.9. Australia’s February trade balance results were optimistic too with the surplus coming in A$0.825b rather than the forecast A$0.7b.
However, Australian Dollar demand was likely weighed slightly by February’s building permits results, which fell short of -4.8% forecasts and instead contracted at -6.2%.
US Dollar (USD) Strength Limited by Mixed US Ecostats
AUD/USD may have seen further losses this week if US data was more impressive, but instead the US data has been relatively mixed and US Dollar demand has been limited ahead of Friday’s key US Non-Farm Payroll report.
ISM’s March US PMIs have been published this week, with both manufacturing and non-manufacturing composite PMIs falling short of expectations.
The non-manufacturing PMI was forecast to slip from 59.5 to 59.0, but instead fell to 58.8 in March.
Thursday’s data wasn’t particularly impressive either. The latest US trade deficit update was disappointing and saw the deficit deepen from $-56.7b to $-57.6b.
Australian Dollar to US Dollar (AUD/USD) Forecast: US Non-Farm Payroll Report in Focus
Major US data due for publication at the end of the week could influence whether the Australian Dollar to US Dollar (AUD/USD) exchange rate ends the week higher or lower.
While Australian TD-MI inflation gauge data will be published on Friday, the US Non-Farm Payroll report due in the American session is much more likely to influence late-week AUD/USD movement.
The Non-Farm Payroll report has the potential to influence the US Dollar as well as Federal Reserve interest rate hike bets if any datasets surprise investors.
The most influential figures besides the headline NFP figure will be the March US unemployment rate and the average hourly earnings results.
If US wage growth impresses investors, the US Dollar is likely to strengthen and investors would become more confident that the Federal Reserve could hike US interest rates as many as four times throughout 2018.
Developments on the US trade stance could continue to cause volatility in the Australian Dollar to US Dollar exchange rate in the coming sessions.
But Australian business confidence and consumer confidence, as well as US inflation and Fed meeting minutes are more likely to influence AUD/USD direction next week.