Australian Dollar US Dollar (AUD/USD) Exchange Rate Falls on Better-than-Forecast US Orders

March 13, 2019 – Written by John Cameron

Australian Dollar US Dollar (AUD/USD) Exchange Rate Dips as US Durable Goods Rises

Today the Australian Dollar US Dollar (AUD/USD) exchange rate has fluctuated over the course of the session, with the pairing currently trading down at an inter-bank rate of $ 0.7056.

Data showed that US non-defence capital goods orders (excluding aircraft) rose by a better-than-forecast 0.8% in January.

This was the highest rise in orders since July 2018, however December’s figure was revised to a lower -0.9%.

Durable goods orders for January also rose to 0.4% despite forecasts suggesting this figure would contract following December’s rise of 1.3%.

However, it was not all good news for the US as the Producer Price Index performed below market expectations, coming in at 2.5% in February compared to the previous year where it rose by 2.6%.

Australian Dollar (AUD) Muted as Consumer Confidence Slides by the Most in Over Three Years

Westpac recorded that consumer confidence had contracted by -4.8% in March, contrasting with the ‘cautiously optimistic’ consumer mood that was felt through 2018.

This was the largest decline in confidence since late 2015.

This came after February’s business conditions slipped below the average from 7 to 4 and business confidence fell to 2.

Commenting on the data, Senior Economist at AMP Capital, Diana Mousina said:

‘The consumer and business confidence surveys confirm the weakening in the Australian economy lately and point to subdued conditions looking ahead.

‘The continued poor data flow in Australia means that the next RBA meeting in April is ‘live’ which means that the odds of no change versus a rate cut look fairly even despite the RBA appearing neutral in its commentary.’

US Dollar (USD) Claws Back Losses despite Weak Inflation Figures

The US Dollar (USD) has managed to claw back some of its losses over the course of today’s session following a weaker-than-expected Consumer Price Index.

Yesterday, data showed that US consumer prices rose for the first time in four months, with February’s monthly Consumer Price Index rising by 0.2%.

However, this increase in February was a modest one, representing the smallest annual rise in two-and-a-half years.

Together with slowing economic growth, this could support the Federal Reserve’s ‘patient’ approach towards further interest rate hikes this year.

Following the release the Australian Dollar US Dollar (AUD/USD) exchange rate rallied.

Commenting on this, Ryan Sweet, a Senior Economist at Moody’s Analytics said:

‘We view the risks to the inflation outlook as weighted to the downside as the domestic economy has slowed more quickly than we had expected.

‘The Fed is on pause for the foreseeable future.’

Australian Dollar US Dollar Outlook: Will the AUD/USD Exchange Rate Slide on Poor Australian Consumer Inflation Expectations?

Looking ahead to tomorrow, the Australian Dollar (AUD) could slip against the US Dollar (USD) following the release of Australia’s consumer inflation expectations.

If March’s figure falls below the previous month’s figure of 3.7%, following the trend of the recent Australian data releases, the ‘Aussie’ could slip against the Dollar.

Thursday will also see economic data from China, which will likely cause movement in the pairing.

If Chinese retail sales fall in February, it could cause the risk-sensitive Australian Dollar to slide against USD.

There may be further movement in the pairing in the afternoon following the release of the US initial and continuing jobless claims.

If jobless claims increase more than forecast it could cause the Australian Dollar US Dollar (AUD/USD) exchange rate to rise.

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TAGS: American Dollar Forecasts