The Australian dollar ended the previous week 0.5% lower versus the US dollar at US$0.6786. This was the third consecutive weekly decline for the Aussie dollar. The pair is edging lower at the start of the new week.
After losing ground across the previous week the Australian dollar staged a small rebound in the Asian session overnight following encouraging US — China trade news. China saying there will be tougher penalties for Intellectual Property (IP) theft was seen as a move that could help boost the chances of finalising a phase one trade deal between US and China. The announcement lifted risk sentiment in early trade on Monday. However, US dollar strength mean that the Aussie was unable to extend gains higher, before slipping southwards.
US — China trade developments are important to the Australian dollar because the currency is considered a proxy of China.
Investors will now look ahead to the Asian session on Tuesday where Reserve Bank of Australia’s President Dr Philip Lowe is due to give a speech titled “Some Lessons From Overseas”. In the speech Dr Lowe is not expected to comment on the near-term monetary policy outlook. However, any comments regarding the Australian economy could drive a reaction in the Australian dollar.
Dollar Investors Look To Consumer Confidence
The US dollar is advancing cautiously in the European session on Friday, extending gains from the previous week. Data released on Friday boosted the outlook for the US economy. Both US and manufacturing PMI’s printed better than what analysts had predicted. The manufacturing pmi increased to 52.2 in November, up from 51.3 in October. Activity in the service sector jumped to 51.6 this month, up from 50.6 the previous month. The data supports the Federal Reserve’s analysis that the US economy is slowly recovering.
With no more US data due today, dollar investors are awaiting their next cue. Investors will now look ahead to several data releases tomorrow. These include US trade balance, US housing data and US consumer confidence.
US consumer confidence will be closely eyed. Analysts are expecting household confidence to have ticked higher in November. This is important because a more confident consumer often spends more; good news for the US economy and inflationary pressures. Strong reading could boost the dollar.
|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.