Optimistic trade headlines have boosted the Australian dollar US dollar exchange rate. The Aussie dollar US dollar rate pared losses from the previous session and rallied to a high of US$0.6913. The pair is currently trading up 0.2% on the day just shy of US$0.69.

Headlines detailing progress in the US – China trade talks helped boost the Australian dollar on Thursday, which is one of the top performing currencies. China’s Commerce Ministry announced that China and the US would gradually roll back tariffs as each new phase of the trade deal is reached. A Reuters report also said that President Xi and Trump could meet 3-4 December at the NATO Summit in London.

Suddenly it would appear that the US and China are very close to agreeing to a phase 1 deal and signing it early next month. Today’s reports add to optimism that trade tensions are easing between the two powers. This would have positive knock on effects for the broader global economy but particularly for the US and Chinese economy.

China is Australia’s number one trading partner. This means that the health of the Chinese economy is very closely linked to the health of the Australian economy and the strength of the Aussie dollar.

Looking ahead, investors will continue to digest trade headlines, the RBA statement will also be released tomorrow.

Stronger Risk Sentiment Weighs On Dollar

The US dollar was edging lower on Thursday amid a growing risk on environment. As hopes of a trade deal between the US and China increase demand for safe heaven currencies such as the dollar decrease. Investors are still a little sceptical, negotiations have followed a pattern of one step forward two steps back. However, today’s news is very positive.

Today there has been some mid-tier data releases. US continuing claims were slightly higher than analysts’ expectations, initial jobless claims were lower balancing out the overall impact.

Investors will now look ahead to tomorrow’s consumer sentiment data from the University of Michigan. Analysts predict that consumer sentiment will remain steady in November at 95.5. A stronger than forecast reading could lift the dollar.

What do these figures mean?
When measuring the value of a pair of currencies, one set equals 1 unit and the other shows the current equivalent. As the market moves, the amount will vary from minute to minute.

For example, it could be written:

1 USD = 0.6784 AUD

Here, $1 is equivalent to approximately A$0.67. This specifically measures the US dollar’s worth against the Australian dollar. If the Aussie dollar amount increases in this pairing, it’s positive for the US dollar.

Or, if you were looking at it the other way around:

1 AUD = 1.4739 USD

In this example, A$1 is equivalent to approximately $1.47. This measures the Australian dollar’s worth versus the US Dollar. If the US dollar number gets larger, it’s good news for the Aussie dollar.

 


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