The Australian dollar is advancing versus its US counterpart on Tuesday. The Aussie dollar US dollar exchange rate is trading 0.1% higher at US$0.6783, snapping a 4-day losing streak.
The Australian dollar jumped close to 0.68 following comments from the Reserve Bank of Australia’s governor, Dr Philip Lowe. Dr Lowe said that quantitative Easing was not on the central bank’s agenda. Quantitative easing, or QE, is a programme whereby the central bank buys up large quantities of government bonds or another financial asset in order to inject liquidity into the market. It is a monetary policy easing tool, so the fact that the RBA are not considering it is Australian dollar positive.
Dr Lowe also commented that negative interest rates were unlikely. His comments come after the RBA have cut interest rates three times this year, taking interest rates to a record low of 0.75% to shore up the slowing economy.
After the more hawkish comments Dr Lowe also noted that all options were still on the table should Australia experience a rapid increase in the unemployment rate along with a decline in inflation. As a result, the Australia dollar eased back from the session high.
There is no high impact Australian data due to be released today. Investors will continue digesting US — China trade headlines. Any sign of a deal could boost China proxy the Aussie dollar.
US Consumer Confidence Up Next
The US dollar is trading broadly flat on the day as investors digest yet further developments in the US — China trade dispute. Despite both sides saying they are close to a phase one trade deal, the fact there is still no discussions around signing such as deal suggests has investors assuming that there is still or work to be done.
Data so far today has been dollar supportive. The US trade balance decreased in October to $66.5 billion, down from $70.4 billion the month previous. House prices are also in the rise, increasing 0.6% month on month in September.
Investors will now look ahead to US Consumer confidence figures. Analysts forecast an increase in household sentiment to 127. The US labour market remains healthy and this is a good sign for consumer sentiment. A robust labour market and strong earnings growth support confidence. Confident consumers often spend more which in turn boosts the economy and inflationary pressures. A strong reading could see the US dollar advance.
|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.