The Australian dollar gained 0.3% versus the US dollar across the previous week; its third straight week of gains against its US counterpart. The Aussie dollar pushed through US$0.6900 in early trade on Monday and is currently up 0.3% on the day at US$0.6917.
US — China trade optimism is boosting the Australian dollar as the new week kicks off. The two sides had agreed a first phase trade deal which has lifted the Aussie dollar over recent weeks, despite a lack of details surrounding the deal. The fact that there is still no date for the signing of the deal has unnerved investors.
However, over the weekend China said that it would cut import tariffs on a wide range of US products such as pork and tech items in an attempt to show its desire to open its economy. The move suggests that US China relations are improving, and that China is more willing to embrace commerce more openly.
China is Australia’s principal trading partner. Signs that tensions are thawing between the two powers is good news for the Chinese economy, which has been negatively impacted by the ongoing trade dispute. This in turn is good for the Australian economy and the Aussie dollar.
There is no high impacting Australian data to be released today pair for the rest of the week. Trade headlines will continue to drive the Aussie dollar.
Dollar Shrugs Off Weak Durable Goods Data
The US dollar strengthened at the end of last week, although remained weaker than the Australian. The dollar advanced following encouraging US macros data. US GDP grew at 2.1% year on year as forecast. PCE inflation surprised to the upside and US consumer confidence was better than analysts had forecast. The data boosted expectations that the Federal Reserve would not continue its rate cutting cycle next year.
Today the dollar is trading broadly higher, albeit less so than the Aussie in slow trade ahead off the Christmas break. Weaker than forecast US durable goods data hasn’t knocked sentiment by much despite declining by -2% month on month, well below the 1.5% growth forecast.
Investors will now look towards US new home sales for further clues over the health of the US economy.
|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.