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The Australian dollar closed Thursday’s session lower versus the US dollar for a second straight day. The Australian dollar US dollar exchange rate touched at low of US$0.6783. Today, the Aussie is attempting a weak recovery, up 0.1% in the European session.
The Australian dollar is struggling to mount a meaningful recovery on Friday and remains close to the lower end of its weekly trading range as investor continue to digest mixed messages over trade.
The latest comments came from the President of China Xi Jinping, who said that China wanted to make a trade deal with the US but that they were not afraid to fight back. His more positive tone hoped lift risk sentiment, boosting demand for the Chinese proxy, the Australian dollar.
President Xi Jinping’s comments come after a week full of mixed trade messages. Firstly, President Trump threatened to raise tariffs again. A bill supporting the protesters in Hong Kong passed the Senate and the House which angered China who reportedly threatened to not do a deal. China then extended an invitation to the US for further face to face talks and finally these comments by President Xi Jinping. Investors are desperately struggling to decipher whether the two powers are actually closing in on a phase one trade deal or not.
Dollar Investors Look Ahead to PMI’s
The dollar was also lacking direction on the final day of the trading week. After trade headline exhaustion investors are looking forward to macros economic data releases. The US manufacturing and service sector PMI’s will be under the spotlight.
Analysts predicting that activity in the US manufacturing sector ticked higher in October to 51.4, up from 51.3 in September. Activity in the service sector is also expected to have increased to 51.4, up from 50.6 in September whereby the figure 50 separates expansion from contraction.
Investors will be looking for confirmation that the US manufacturing sector is recovering from its recent slump and that the slowdown isn’t spilling over into the dominant service sector. A strong reading could help lift the dollar.
Investors will look towards US consumer confidence data to end the week. Household confidence is expected to remain steady.
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| 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. |
