Over the past week the Australian Dollar has struggled thanks to US Dollar strength, improved Federal Reserve rate hike bets, heightened expectations of Reserve Bank of Australia (RBA) intervention and generally damp market sentiment.
Last Week’s Australian Dollar Exchange Rates:
Australian Dollar to US Dollar (AUD USD):
Week’s High: 0.7663
Week’s Low: 0.7470
Australian Dollar to Pound Sterling (AUD GBP):
Week’s High: 0.5804
Week’s Low: 0.5674
Australian Dollar to Euro (AUD EUR):
Week’s High: 0.6890
Week’s Low: 0.6770
Australian Dollar to New Zealand Dollar (AUD NZD):
Week’s High: 1.0764
Week’s Low: 1.0434
Australian Dollar Exchange Rates Cooled Last Week, USD Jumped
Market sentiment has been generally damp over the past week thanks mostly to weak global equity markets and falling commodity prices. As a risk-correlated currency, the Australian Dollar declined in response to safe-haven demand. This will actually be a positive outcome in the view of the Reserve Bank of Australia (RBA) as ‘Aussie’ (AUD) overvaluation has been a persistent concern.
The other impact of damp market sentiment has been the rising value of the US Dollar. This has also added to ‘Aussie’ headwinds.
Furthermore, a succession of positive US ecostats have improved market odds of at least one Federal Reserve rate hike this year. Should the Fed raise rates the Australian Dollar will decline.
Heightened speculation of Reserve Bank of Australia policy intervention has also hurt demand for the Oceanic currency. The latest set of policy meeting minutes showed that, whilst policymakers opted to keep policy unchanged, the door was left wide open for a rate cut in the near-future. One positive note is that if AUD exchange rates continue to decline, the central bank may not need to employ stimulus measures in order to devalue the ‘Aussie’.
Australian Dollar Exchange Rate Forecast: Second-Quarter Consumer Prices in Focus
Over the coming week Australia’s data docket will be comparatively sparse. However, Wednesday’s second-quarter consumer price data is very likely to cause AUD exchange rate volatility. Import and export indices may well be of interest, and June’s Private Sector Credit may also cause changes.
Given the lack of highly influential domestic data to drive AUD movement, market sentiment is expected to be the key driver once again. US Dollar positioning will also be of significance, as well as data results from China.
With that in mind, US Consumer Confidence, Durable Goods Orders, Annualised GDP and Personal Consumption will all be of significance for those trading the Australian Dollar. However, the most significant US ecostat will be Wednesday’s Federal Open Market Committee (FOMC) interest rate decision.
In terms of Chinese data to look out for; Industrial Profits and Consumer Sentiment reports have the potential to cause ‘Aussie’ volatility.