Increased optimism over a US China trade deal has helped lift the Australian dollar versus the US dollar on Friday. The pair gained 0.2% in early trade; however, it is struggling to move meaningfully beyond US$0.6800 a key level for technical traders.
The Australian dollar rallied in early trade after White House Adviser Larry Kudlow indicated that progress was being made towards a trade deal between US — China. Larry Kudlow said that a trade deal “was coming down to the short strokes”. Adding to trade deal optimism US Commerce Secretary Wilbur Ross said that there was a very high probability that the US will reach a trade deal with China. Whilst neither offered any new details, sentiment has been enough to cautiously lift the Aussie dollar.
After a week of mixed messages investors have responded cautiously to this latest show of optimism towards a phase one trade deal. The Australian dollar has risen because China is Australia’s main trading partner. A deal with the US would boost the Chinese economy, which would be beneficial for the Australian economy and lift the Australian dollar.
Aussie dollar gains are being capped by the escalating troubles in Hong Kong.
Dollar Reaction Muted After US Retail Sales Impress
The improvement in risk sentiment weighed on the US dollar in early trade on Friday. As the mood music surrounding the US — China trade deal improved investors have been prepared to take on more risk. As a result, the safe haven US dollar has edged lower.
US retail sales numbers were the main attraction on the US economic calendar. After a particularly weak month in September where sales actually declined by -0.2%, investors were please to see that the US consumer continued spending in October. Retail sales increased a solid 0.3% month on month in October, ahead of the 0.2% increase that analysts had pencilled in.
Retail sales figures are notoriously volatile. However, today’s data suggests that the current slowdown in the US manufacturing sector amid the ongoing US — China trade dispute, is not spilling over into the consumer sector; the dominant sector in the US economy.
| 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. |
