The Australian Dollar (AUD) experienced some positive movement during the Australasian trading session yesterday, pushing up by over half a percent in the afternoon however, it continues to remain vulnerable to further declines in the near future.
China’s stock market slump earlier in the week proved to weigh down on the ‘Aussie’ (AUD) and the aptly described ‘sluggish Australian economy’ suggests there is little to look forward to in order to lift the value of the AUD.
There is very little economic data out of the Australian economy today, with investors and economists focusing on tomorrow’s speech to be made by Governor Stevens, Head of the Reserve Bank of Australia (RBA). Australian Building Approvals will also be announced tomorrow, with the forecast being a contraction reading of -0.9% from the 2.4% previous figure.
The Reserve Bank of Australia (RBA) will meet next Tuesday to announce their August interest rate decision. The forecast is that rates will be kept on hold at a record low 2.0%.
Australian Dollar to US Dollar (AUD/USD) Exchange Rate Likely to Be Volatile Over Next 48 Hours
The AUD/USD exchange rate has lifted slightly from the fresh 6 year low thaw trading at the start of the week, pushing up close to a full percent in the past 24 hours.
Overnight, US Consumer Confidence was released; resulting in a printed figure of 90.9 when 100.1 was expected, allowing the AUD/USD exchange rate to move north. The US Flash Services Purchasing Manager’s Index (PMI) was also announced out of the States last night and was in line with expectations at 55.2.
Volatility is expected in the AUD/USD exchange rate this evening and into the early hours of tomorrow morning, following on from the Federal Open Market Committee (FOMC) statement. Although the Fed is expected to still keep rates on hold at 0.25%, any further elaboration on Janet Yellen’s recent hawkish tone is likely to provide added strength to US Dollar and take the AUD/USD exchange rate to a new low.
Further movement is expected Thursday evening due to US Unemployment Claims and quarterly Advance Gross Domestic Product (GDP) figures being announced. With the US data forecast to be quite strong, the ‘Aussie’ (AUD) is likely to only likely to show improvement against the ‘Greenback’ (USD) if weaker than expected US economic results occur.