The Australian Dollar (AUD) experienced some intraday movement yesterday, falling approximately a further quarter percent against the majors initially, before regaining the ground in the afternoon. The main reason for the ‘Aussie’ (AUD) diminishing in value earlier in the week is due to weakening commodity prices, in particular Iron Ore.
Overnight the AUD fell heavily against the majors, following a speech made by Philip Lowe, Deputy Governor of the Reserve Bank of Australia (RBA). Lowe communicated that he expects the AUD to continue to decline with commodity prices and even hinted at a rate cut if the economic outlook for Australia does not improve. The AUD responded to this speech by falling by over one percent against the majors.
This week is a relatively quiet week for economic releases out of Australia. Today Australia will report on Construction Work Done for the third quarter of the year, however it is not usually much of a currency market mover. Tomorrow Australia’s Private Capital Expenditure (PCE) figure has been forecast to be -1.7% from the previous month minor growth reading of 1.1%.
Australian Dollar to USD (AUD/USD) Exchange Rate Hit 4 Year Low
The AUD to USD exchange rate has been trending downward this week due to softening commodity prices and the release of strong US data.
Overnight the US economy announced their Gross Domestic Product Figure (GDP) which had been forecast to reduce from 3.5% to 3.3%. The printed figure was 3.9% causing the AUD to USD exchange rate to tumble to its’ lowest level since June 2010.
US Consumer Confidence announced last night also indicated positive sentiment regarding the US economy, despite falling short of the forecast figure.
Further releases out of the US are scheduled for tonight in the form of Durable Goods Orders and Initial Jobless Claims. Both have the potential to continue to bring additional strength to the ‘Greenback’ (USD) and continue the trend of a declining AUD to USD exchange rate.
Australian Dollar to Pound Sterling (AUD/GBP) Exchange Rate Remains Volatile
The AUD to GBP exchange rate moved favourably in the lead up to the weekend, however it has been trending downward this week, losing approximately two percent over the past two days.
Tonight the UK will release their annualised Gross Domestic Product (GDP) figure. The forecast is that UK GDP will remain at 3.0%, with any deviation from this figure likely to add volatility to the currency pairing.
With an absence of high tier domestic releases out of Australia this week and external pressures driving down the value of the Australian Dollar (AUD); the AUD to GBP exchange rate is forecast to continue to soften, especially so if the UK GDP expectations are exceeded.