The Australian Dollar US Dollar exchange rate has climbed higher following news of rocketing company profits.
Company Profits Data Boosts Economic Outlook and Buoys AUD USD
Yesterday’s company operating profit data from the fourth quarter of 2016 showed a stellar 20.1% increase. The figure, which represents a huge acceleration on Q3’s 1.5% growth, clocked in two-and-a-half-times above forecast.
This has helped to quell fears the Australian economy is headed for a recession. The domestic economy has enjoyed 25 years without a recession – defined as two successive quarters of contraction – although concerns were ignited in Q3 last year when the economy shrank -0.5% instead of the -0.1% predicted.
Slightly taking the edge off the positive data was the inventories figure, also for the final three months of 2016. Inventories only grew 0.5% – a bigger slowdown from Q3’s upwardly-revised 0.9% growth than the forecast 0.5%.
Nonetheless, a sluggish US Dollar could not push the Australian Dollar into negative territory and so AUD USD exchange rates has held 0.1% gains to trend in the region of 0.76.
USD Lacklustre as Markets Await Trump Speech to Congress
With President Donald Trump due to give a speech to Congress tomorrow, markets are currently little disposed to buy the US Dollar.
Trump frequently promised on the campaign trail that he would implement a bold package of fiscal reforms and additional infrastructure investments.
These goals appear to have been side-lined since his inauguration, with markets becoming frustrated that curbing immigration, ripping up trade deals and attempting to get his Mexican border wall built appear to be higher up on Trump’s list of priorities.
It is hoped that tomorrow’s speech to Congress will yield more details on his plans. Until then, investors are reluctant to position themselves on the US Dollar until they know in which direction it is likely to move.
AUD USD Exchange Rate Forecast; ‘Aussie’ to Retain Advantage as Investors Await Trump Speech?
There is no US data set for release today, although even if there was it is likely that the markets would largely ignore it due to the focus on Trump’s speech.
This could leave the Australian Dollar dominant, despite the relatively low-impact nature of much of the day’s ecostats.
HIA new home sales and private sector credit figures for January is the most high-profile data scheduled for release, although the ‘Aussie’ could also react to the latest Roy Morgan weekly consumer confidence index figures for the past week.