The Australian Dollar to US Dollar (AUD/USD) exchange rate could be set to recover last week’s losses as it gains on steadily increasing risk sentiment and positive data, with the US Dollar weakening once more as a result of Fed statements.
Australian Dollar (AUD) Strengthened by Risk Appetite and Strong Australian Data
Despite risk being decidedly out of favour for much of last week’s session, positive commodity news and mixed reactions from the Federal Reserve’s latest minutes release have seen markets making a slow but sure shift towards higher yielding assets.
AUD/USD has benefitted particularly from this as it looks on track to recover the -130 pip loss it sustained last week. At the time of writing, the pair is up almost 0.8% and trends in the region of 0.7648. If the pair manages to climb above March’s high of 0.7699, it would take the pairing close to a year-high.
Australian data this week has provided a strong footing for the otherwise risk-reliant pair. Data released on Tuesday morning included March’s NAB business confidence score, which was revealed to have doubled from 3 to 6 in a show of improved optimism towards the future of Australian businesses.
While not all data was positive, with the less-influential Roy Morgan weekly consumer confidence index decreasing from 113.4 to 112.0, most data helped buoy the ‘Aussie’, including credit card datasets which printed above January’s sums.
Federal Reserve Minutes Continue to Weigh on US Dollar (USD)
Despite Federal Reserve Chairwoman Janet Yellen adopting a confident tone and lavishing praise on the recovery of the US economy last week, the Fed’s dovish approach to interest rate hikes still has investors concerned and wary of the US Dollar.
Yellen has maintained her cautious stance towards interest rates since early March, indicating little chance of a rate hike taking place in the near future.
While US data itself has been quiet, Federal Reserve policymakers’ statements and speeches have lit up headlines so far this week. Janet Yellen even met with US President Barack Obama during Monday’s US session, with Obama praising Yellen and showing respect for her progress in restoring the United States economy.
Australian Dollar to US Dollar Exchange Rate Forecast: Westpac Confidence and US Datasets Due Today
In what looks to be the last important data release for Australia this week, Westpac’s April consumer confidence reports are due for release later this morning. March’s confidence decrease of -2.2% will ideally not be followed by further losses this month as a low score could weigh on the ‘Aussie’.
US data, on the other hand, looks to be a lot more eventful. As well as a number of speeches from Federal Reserve policymakers throughout the week, Wednesday night will also see the release of the highly anticipated advance US retail sales report, which is currently forecast to have improved from -0.1% to 0.1%.
Better-than expected US data could offset Fed dovishness, but risk sentiment will ultimately rise if Fed policymakers continue to make dovish speeches throughout the week.
At the time of writing, the Australian Dollar to US Dollar (AUD/USD) exchange rate trends in the region of 0.7648, while the US Dollar to Australian Dollar (USD/AUD) exchange rate trends around 1.3072.