Tentative RBA Meeting Fails to Prevent Major AUD/USD Exchange Rate Gains
The Australian Dollar to US Dollar exchange rate has seen a substantial rise of 0.5% today, although this is mainly down to USD weakness at the present time.
The latest Australian news has concerned the Reserve Bank of Australia (RBA), which has made its interest rate decision for the month.
Australia’s central bank has left interest rates on hold at 1.5% again as expected, in addition to maintaining a largely cautious economic outlook.
RBA policymakers have refrained from adjusting monetary policy because of worries about slow wage growth and this outlook seems set to remain solid.
While prudent, this approach has nonetheless frustrated AUD traders, who have been waiting for an Australian Dollar-boosting RBA interest rate hike since 2010.
US Dollar to Australian Dollar Exchange Rate (USD/AUD) Drops by -0.5% after Manufacturing Disappointment
Signs of a deterioration in the US manufacturing sector have had a negative effect on the US Dollar today, resulting in the USD/AUD exchange rate falling noticeably.
Recent ISM manufacturing PMI data showed that sector activity in March has fallen by more than expected, while new orders have also fallen compared to February.
There was also a reported reduction in persons employed in the manufacturing sector, which has compounded current uncertainties about the US’s productive abilities.
These lacklustre figures have come at the same time that concerns about a trade war with China are growing, which has made the US Dollar unappealing so far this week.
Australian Dollar to US Dollar Exchange Rate Forecast: Risk of AUD/USD Decline on Trade Data
There will be additional high-impact Australian economic data out this week, but for the most part the ecostats could end up worsening the AUD/USD exchange rate.
On the plus side, the retail sales figure out on 4th April is predicted to show growth from 0.1% to 0.3% in February.
Out around the same time, however, will be building permits data for February which has been forecast to show less positive results.
If the quantity of granted permits falls by -5% as expected, then the Australian Dollar could also slide in value.
Reduced levels of permits being granted implies that there will be less construction activity in the future, which may have a negative knock-on effect on the AU economy.
The biggest blow to AUD traders could come on 5th April, when February’s balance of trade figure is tipped to shrink from a surplus of AU$1.055bn to AU$0.7bn.
On the other side of the currency pairing, the next upcoming US economic data will be 5th April’s employment change and non-manufacturing PMI stats.
A forecast-beating rise in the number of employed persons could boost US Dollar demand, although if the PMI reading slows as expected then any USD gains could be limited.