Minor Decline in AU Consumer Confidence Leaves AUD/USD Exchange Rate Tight
The Australian Dollar has struggled to make any gains against the US Dollar today, but has otherwise seen small advances against its regular peers.
ANZ Bank has provided the latest source of AUD support, by publishing the weekly Roy Morgan Consumer Confidence index.
This has shown a decline from 116.4 points to 115, but this is still above the long-term average of 112.9 points.
Commenting on the results was David Plank, Head of Australian Economics at ANZ;
‘Despite last week’s fall, sentiment towards economic conditions has improved considerably since its low point in early September.
Views around current conditions remain above their long-term average and overall economic conditions are at their highest point since February.
The recovery in sentiment around the ‘time to buy a household item’ index is also encouraging. A sustained improvement will likely bode well for holiday season sales’.
US Dollar Trades Tightly ahead of High-Impact Fed Speeches
The US Dollar has been virtually flat against the Australian Dollar today, having struggled to pick up due to trader uncertainty.
Limiting issues include concerns that the Republican Party might struggle to implement tax reforms, which could provide a nationwide economic boost.
Recent Federal Reserve news has also been concerning, with policymaker Neel Kashkari stating that he doesn’t feel inclined to raise US interest rates with inflation so low.
Speaking on Monday night, Kashkari warned that;
‘Because inflation is low, I am seeing no reason to tap the brakes on the economy.
My perspective is, let’s allow the job market to continue to strengthen, allow more Americans to go back to work [and] allow wages to strengthen.
If we start to see inflation creep back up to our 2% target, we can tap the brakes then’.
Kashkari is currently a voting member on interest rate decisions, so this outlook slightly lowers the chances of a December rate hike.
A USD rally could occur on upcoming Fed speeches, which will bring more comments from major voters on the Federal Open Market Committee (FOMC).
Australian Dollar-US Dollar Exchange Rate Hangs in the Balance on Fed Remarks
Both the Australian Dollar and US Dollar could be strongly influenced by upcoming Federal Reserve speeches, coming from policymakers William Dudley and Jerome Powell.
Both officials are voting on upcoming US interest rate decisions, but Powell will be the real star of the show.
Powell will be taking over from current Fed Chair Janet Yellen in 2018, so traders will be eager to hear if he has plans for further rate hikes in 2018.
If Powell and Dudley support a December interest rate hike and Powell hints at more rate hikes to come next year, the US Dollar could rally against the Australian Dollar.
Further ahead, the week’s first significant Australian news will be the AIG manufacturing index out late on Thursday.
This is tipped to show a growing level of manufacturing output in November, which could boost the Australian Dollar to US Dollar exchange rate.
Recent Interbank AUD USD Exchange Rates
At the time of writing, the Australian Dollar to US Dollar (AUD USD) exchange rate was trading at 0.7611 and the US Dollar to Australian Dollar (USD AUD) exchange rate was trading at 1.3133.