The Australian Dollar to US Dollar (AUD/USD) exchange rate appears to have formed a range, trading between 0.7572 at the lowest and 0.7892 at the highest over the last 3 months. Currently the AUD/USD exchange rate is trading towards the top end of the range at around 0.7850 at 09:00 AEST.
Today the Conference Board Leading Index will be released locally in what can be considered a relatively quiet week for domestic data releases. The economic data scheduled to be released this week that is likely to influence the AUD/USD exchange rate is heavily US orientated.
Mixed results are expected from the US data throughout the week, contributing to the likelihood of high volatility in the AUD/USD exchange rate. Tonight’s US Consumer Confidence for the month of April is expected to rise and will commence the release of economic information from the States this week.
The high-tier economic releases out of the US will continue tomorrow night when the US Gross Domestic product (GDP) figure is announced. The annualised US GDP is currently sitting at a healthy 2.2%, however the forecast is that this will fall to 1.0%. US Personal Consumption for the first quarter is also expected to reduce from 4.4% to 1.7%.
Despite the expectation that these economic indicators are expected to fall, the AUD/USD exchange rate will likely move in response to the result compared to the forecast, instead of the result compared to the previous reading. With such low expectations, the US economy can potentially post a reduction to the previous result, but a higher than expected figure will likely strengthen the ‘Greenback’ (USD) and push down the AUD/USD exchange rate.
The US Federal Open Market Committee (FOMC) Rate Decision will take place late Wednesday night following on from the GDP and Personal Consumption data. No surprises are expected this month, with the Fed very likely to continue to keep rates on hold at 0.25%. Again it will be wording of the speech by Janet Yellen, Head of US Federal Reserve, which will impact on the AUD/USD exchange rate. Economists and investors will pay close attention for any indication as to whether or not the Fed still have the intention of raising interest rates this year.
Australian Dollar to US Dollar (AUD/USD) Exchange Rate Forecast
The AUD/USD exchange rate still appears vulnerable to further downward movement despite the US Dollar (USD) rally appearing to have stalled against the AUD.
Although minor upward movement in the AUD/USD exchange rate may occur in the short-term, the currency pairing is still weighed down by the intent of the Reserve Bank of Australia (RBA) to cut interest rates further this year. In contrast, there is still the distinct possibility of the US economy raising interest rates which adds to the downward pressure on the AUD/USD exchange rate.