The Australian Dollar has rallied against the US Dollar today, following a warning from Goldman Sachs about the future direction of the US economy.
Australian Dollar Advance Seen after Iron Ore Price Jump
The Australian Dollar US Dollar exchange rate has been strong today, rising by around 0.4% after positive Australian commodities news and a negative forecast concerning the US.
In the former case, the price of iron ore has climbed considerably of late, following a brief downwards slant.
The US Dollar-damaging news has come from Goldman Sachs, which has estimated that a possible trade war between the US and China could have negative knock-on effects for both countries.
Suggesting a possible olive branch for this situation was Goldman China Vice Chairman Ha Jiming, who stated that;
‘To prevent such a trade war, China could take measures including promoting outbound tourism or opening service industries such as business and finance to the US. That will help the US export services to China and ultimately to reduce its trade deficit’.
Australian Dollar Predicted to Slide if RBA Gov Lowe Hints at Rate Cut Today
This evening will bring a scheduled speech from Reserve Bank of Australia (RBA) Governor Philip Lowe, which could have a detrimental effect on the Australian Dollar if the possibility of an interest rate cut is tabled.
Although the recent interest rate decision saw no change at 1.5%, some economists have stated that the RBA’s forecasts are too dependent on continuous growth.
In this case, some economists have theorised that a slowdown in investment or housing market activity could prompt a rate cut out of the blue, which would likely cause the AUD to fall sharply in response.
US Dollar Forecast to Flop if Fed Officials Change Tone
The next notable US news will come early on Friday, when Fed officials James Bullard and Charles Evans are due to make speeches.
Although fellow Fed member Patrick Harker offered a surprisingly hawkish outlook earlier in the week, it remains to be seen if Bullard and Evans will follow suit in the wake of further concerning developments due to the Trump administration.
The other notable US development on Friday will be an IEA oil market report, which could boost the US Dollar if a particularly optimistic forecast is put forward.
Recent AUD USD Interbank Exchange Rates
At the time of writing, the Australian Dollar US Dollar (AUD USD) exchange rate was trending in the region of 0.76 and the US Dollar Australian Dollar (USD AUD) exchange rate was trending in the region of 1.30.