After falling 0.7% versus the US dollar across the previous week, the Australian dollar is consolidating those losses in the European session on Monday. The Australian dollar US dollar exchange rate is trading flat at US$0.69.
The Australian dollar is trading flat despite increased optimism in the financial markets surrounding the signing of the US – China trade deal this week. After over 18 months of wrangling the two powers agreed a deal in December, which is due to be signed this Wednesday.
Investors are expected to pour over the details of the deal, which have not been released so far. Investors will also be keen to see what the path is towards a phase two trade deal. However, President Trump has previously said that this could have to wait until after the US elections.
With no high impacting Australian data due for release today, investors will look ahead to Chinese trade balance data to be released in the Asian session on Tuesday. The import and export figures will provide further clues as to how the Chinese economy is holding up following the extended trade dispute.
China is Australia’s principal trading partner, for this reason the Australian dollar is considered a proxy for China. Strong Chinese data could hep boost the Aussie dollar back over US$0.70.
Will Tomorrow’s Inflation Data Boost Dollar?
The US dollar appears to be finding demand at the start of the new week after Friday’s disappointing jobs report. The dollar slipped at the end of last week following the non-farm payroll showing fewer jobs were created in December than analysts had predicted, and wage growth was also slower. 144,000 jobs were created and 2.9% wage growth was recorded.
The dollar has been able to rebound as the figures were still strong enough to continue driving economic expansion and the Federal Reserve are unlikely to move from their pause position on monetary policy.
Optimism over the signing of the US – China trade deal is also helping to lift the greenback. Investors are keen to know the details of the deal of which could help boost global demand and lift the US manufacturing sector out of its current slump.
There is no high impacting US data due to be released today. Investors will look towards tomorrow’s inflation report. Analysts are expecting consumer prices to tick higher, which could lift 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.