The Australian Dollar has dropped against the US Dollar today, though a windfall for the Australian currency may yet arrive next week.
The US Dollar has been in a state of gradual recovery since the extraordinary press conference given by Donald Trump, but investors could get a strong sense of déjà vu in the near-term.
AUD USD Exchange Rate Worsens as Trump Conference Damage is Negated by US Sales Figures
The Australian Dollar lost out to the US Dollar at the end of last week, sliding by -0.3% after the US retail sale results for December were announced.
For Australia, despite iron ore prices rising consistently over the week, this was ultimately not enough to dispel concerns about the future of the Trans-Pacific Partnership (TPP) under the Trump Administration.
With the deal itself only being signed at the start of 2016, hopes of TPP actually coming to fruition under a highly protectionist President Trump have been fading fast as his inauguration approaches.
The US Dollar picking itself up after a post-conference crash came thanks to US domestic data, which saw retail sales rise from 0.2% to 0.6% in December.
While it took a while to have an effect, a glut of Fed officials speaking hawkishly on the outlook for 2017 also had the effect of supporting demand for the US Dollar.
Australian Dollar Predicted to Firm if Jobs Stats Prove Favourable Next Week
Major Australian data due next week will arrive on Thursday morning, when December’s unemployment rate is set to be announced. Also out will be the overall employment change during the month, which previously saw a rise of 39.1k persons in employment.
Asides from any further rises in the price of iron ore, the other big event which could boost Australian Dollar demand will be a US event – the inauguration of Donald Trump on Friday.
While Trump is not expected to hit the ground running when it comes to policy actions, the mere fact that he will be President could have a profound negative influence on confidence in the US economy and the US Dollar.
High US Dollar Volatility Likely when Trump Takes Office Next Week
US domestic data out next week will be focused mainly on Thursday, when December’s inflation rate figures are due out. As it is, a rise from 1.7% to 2.1% is expected on the year while an annual rise from 0.2% to 0.3% is also expected.
The inauguration of Trump, however, is likely to overshadow the whole week, as it will mark the last four days before a new and volatile President takes the Oval Office.
Given how much Trump’s conference damaged the US Dollar, the ‘Buck’ may well drop to new lows when he is officially sworn in.
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 0.74 and the US Dollar Australian Dollar (USD AUD) exchange rate was trending in the region of 1.34.