The Australian dollar is seen building on gains from the previous session on Thursday. The Australian dollar US dollar exchange rate closed 0.9% higher on Wednesday and has extended those gains by a further 0.2% hitting a high of US$0.6896 at the time of writing.
The Aussie dollar is advancing on Thursday despite mixed messages over the US — China trade situation. Investors are watching headlines closely for any clues over whether the Trump administration will apply tariffs to an additional $100 billion of Chinese imports on 15th December. Whilst some US officials and China has suggested that the US won’t go ahead with the tariffs, there has been no word from Trump still.
China is Australia’s principal trading partner. Economic data from China is showing that the trade dispute is negatively impacting the Chinese economy. This has a negative spill over effect on the Australian economy and the Aussie dollar.
There is no high impacting Australian data due for release until next week. This means that the Australian dollar will be trading on sentiment.
US Dollar Continues To Fall Post Fed
The US dollar fell following the Federal Reserve monetary policy announcement in the previous session. The Fed kept policy unchanged as was broadly expected. However, dollar investors were unnerved by the Fed’s more dovish stance. Jeremy Powell’s concerns over inflation and the health of the global economy dragged on the dollar. The Fed Chair said that the central bank would need to see a significant and persistent increase in inflation before they would consider raising interest rates.
Following the solid US labour market report and a tick higher in inflation investors had hoped for a more hawkish assessment from Jeremy Powell. The dollar dropped following the announcement and has continued falling across today’s session.
There are no high impacting US data releases today. Investors will look ahead to the release of US retail sales data tomorrow.
|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.