The Australian dollar extended losses versus the US dollar at the start of the week, declining 0.2% on Monday. The pair is holding steady on Tuesday, just below US$0.6850 after shedding close to 1% over the past 10 days.
The Australian dollar was matching strength in the US dollar thanks in part to data showing that Australian business activity improved modestly in October. The National Bank of Australia’s closely watched measure of Australian business conditions increased to 2 in October, up from 0 on the index the previous month. Firms reported a pickup in sales pointing to some stabilisation after months of weakness. Optimism that the Australian economy could be slowly turning a corner helped underpin the value of the Australian dollar.
With little in the way of trade headlines to drive trading in the Australian dollar, investors will look ahead to President Trump’s speech for further clues over progress in the US – China trade war.
Investors then will turn their attention to Westpac consumer confidence data for November, which is expected to rise. This will be followed by the closely watched Australian unemployment numbers on Thursday.
Safe Haven Demand Lifts Dollar
The dollar is trending high on Tuesday, boosted by its safe haven status, as investors grow nervous over progress in the US – China trade talks and over simmering tensions in Hong Kong.
There is a lull in trade dispute headlines today, as ahead of a speech by President Trump at the New York Economic Club. The President is due to speak around noon local time. Investors are waiting for Trump’s take on progress between the US and China as they inch towards a phase one trade deal.
It can be difficult predicting how the dollar will react to President Trump’s speech. Should Trump point to progress in talks, the dollar could decline as investors no longer seek its safe haven protection. On the other hand, it could rally as a trade deal with China would mean that another rate cut by the Federal Reserve would be unlikely, lifting the dollar.
President Trump could use this opportunity to lay out his economic plans just one year prior to the elections.
|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.