The AUD USD exchange rate tumbled on Thursday following the scrapping of the Trans-Pacific Partnership after the US withdrawal on Tuesday.
Australian Dollar US Dollar (AUD USD) Slides as Turnbull Rescinds Commitment to TPP
The Australian Dollar US Dollar (AUD USD) exchange rate fell on Thursday as Prime Minister Malcom Turnbull was forced to back off plans to ratify the TPP in parliament.
This follows the move by US President Donald Trump to pull the US out of the 12 member trade deal as he pursues a more protectionist agenda.
A push to salvage a deal between the remaining members was effectively killed by Japan on Wednesday as Prime Minister Shinzo Abe called any agreement without the US ‘meaningless’ as markets speculate that he may be working on a bilateral trade deal with the US.
Rise in Services PMI Strengthens US Dollar
The US Dollar was also strengthened early this morning by a surge in the latest US Service PMI figures.
Markit, who compiled the data, reported that it jumped from 53.9 to 55.1 in January, outpacing forecasts that it would see a more modest rise to 54.4 and reaching its highest level since November 2015.
The strong start to 2017 was largely thanks to robust domestic demand, which helped to offset a fall in exports due to the overwhelming strength of the ‘Greenback’ in recent months.
Investors were also upbeat about the solid increase in jobs thoughout the sector as it increases the odds for future interest rate hikes from the Federal Reserve.
AUD USD Forecast: US GDP Ahead
The AUD USD exchange rate may rally at the end of the week’s session following the release of the annual US GDP figures, with forecasts that growth will drop from 3.5% to 2.2% in the fourth quarter.
Meanwhile the Australian Dollar may be strengthened by domestic export data later today as prices are expected to have surged from 3.5% to 11% the last quarter of 2016.
Current Interbank Exchange Rates
At the time of writing the AUD USD exchange rate was trending around 0.75 and the USD AUD exchange rate was trending around 1.32