The Australian dollar is extending gains versus the US dollar for a third straight session. The pair closed on Monday 0.2% higher at US$0.6839. The Aussie dollar US dollar is up an additional 0.2% today, hitting a 4-day high of US$0.6861.
A slightly more dovish sounding Reserve Bank of Australia didn’t prevent the Australian dollar advancing on Tuesday. Dr Philip Lowe, the Governor of the RBA, reiterated during a scheduled speech, that the central bank was prepared to cut interest rates further if needed. However, he once gain pushed back on the idea of turning interest rates negative.
The RBA has cut interest rates three times over the past five months, in order to support the slowing economy and boost hiring. Dr Lowe said that he was confident that the cuts were helping the Australian economy turn a gentle corner. Dr Lowe also reiterated themes of recent speeches, once again confirming that it is unlikely that Australia will experience negative interest rates.
Aussie dollar investors will look ahead to inflation figures tomorrow. Inflation is expected to have increased to 1.7%, up from 1.6%. Stronger inflation could help the Australian dollar extend gains into a fourth straight session.
Consumer Confidence Disappoints
The dollar remains under pressure on Tuesday, after weaker than forecast US consumer confidence figures. Household sentiment increased to 125.9 in October, up from 125.1. However, this was we short of the 128 figure that analysts had forecast.
The survey showed that whilst consumers felt good about current conditions, future expectations had lowered slightly. Some consumers expressed concerns about business conditions and job prospects.
Retail sales last month were particularly weak. Data showing that consumer confidence is falling just ahead of the holiday season is also a little worrying. As a result, the dollar slipped.
Investors will now look ahead to tomorrows US GDP data followed by the Federal Reserve monetary policy announcement. Market participants widely expect the Fed to cut rates. Investors will be watching closely to see whether this will be the end of the cycle for the Fed or whether there will be more cuts to come.
| 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. |
