GBP/USD: Pound Higher vs. Fed Weakened Dollar

The Australian dollar dipped 0.4% versus the US dollar in the previous session. The pair closed on Wednesday at US$0.6798. Today the Aussie dollar is paring some of those losses, advancing a cautious 0.1% versus the greenback at the time of writing.

Trade is once again the central theme for Australian dollar investors. The Aussie is clawing tentatively higher following comments from Chinese Vice Premier Liu He, who said that he was “cautiously optimistic” about the prospect of reaching a phase one trade deal.

Reports have also surfaced that China has invited the US to another round of face to face talks in Beijing, boosting optimism of a deal.  The Australian dollar had recoiled in the previous session after the US Senate and US lawmakers supported a human rights act in favour of the pro-Democracy protesters in Hong Kong. This, unsurprisingly, angered China with investors fearing that it could make reaching a trade agreement even more challenging.

Investors are still following the to and fro-ing of trade headlines closely, 16 months after the dispute started, in an attempt to gauge the likelihood of a deal. The Australian dollar, as a proxy to China often reflects trade deal sentiment.

There is no high impacting Australian macro-economic data due the rest of today or tomorrow. Trade headlines will continue to be the driving force behind the Australian dollar.

Dollar Slips On Improved Sentiment

The US dollar was slipping lower versus its peers on Thursday. The slight improvement in risk sentiment amid increased hopes of a trade deal hit demand for the safe haven buck. The greenback has behaved as a safe haven for most of the year.

The minutes from the Federal Reserve monetary policy meeting, added no new information or clues as to where monetary policy could be going from here. The minutes showed that the Fed was in no hurry to reassess the path of interest rates, considering that policy was appropriate at its current levels.

Looking ahead US investors could glance towards existing homes sales figures. This is a mid-tier data point so the dollar reaction could be very limited it reacts at all.

 

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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