Recurrent AU Metal Tariff Fears Trigger AUD/USD Exchange Rate Decline
This downturn comes as the deadline for US metal tariffs approaches.
Although Australian metal producers secured a temporary delay in order to negotiate for an exemption, the delay deadline of 1st May is just around the corner.
The Australian Industry Group’s assertion that it will secure another negotiation delay comes as the US Customs and Borders Agency confirms the lack of an exemption.
Although the imposition of tariffs wouldn’t be a major setback for the Australian economy, it could still cause an AUD devaluation due to the negative implications.
Cautious Consumer Spending Forecast Cements Australian Dollar to US Dollar Exchange Rate Losses
Another factor keeping the AUD/USD exchange rate down today has been a cautious forecast from Commonwealth Bank of Australia (CBA).
CBA Chief Economist Michael Blythe has warned that consumers are less likely to spend at present due to negative perceptions of the Australian economy.
Outlining his suspicions, Mr Blythe said;
‘The risk is that the consumer is now less responsive to good economic news.
Consumers could scale back spending by more than normal in response to a “shock”, accentuating any downturn’.
US Dollar to Australian Dollar Exchange Rate Rises despite Poor US Goods Orders
The latest US economic data hasn’t been entirely positive, but the US Dollar (USD) has still risen against the Australian Dollar (AUD) following the releases.
The growth rate of durable goods orders fell, from 3.5% in February to 2.6% in March.
On the other hand, the number of persons claiming unemployment benefits recently fell to its lowest level in 48 years.
More widely, there have been political concerns that Donald Trump will remove the US from the Iran nuclear deal.
Such a decision, coupled with the reintroduction of sanctions against Iranian crude oil, could create an uncontrollable surge in oil prices to the detriment of US consumers.
Australian Dollar to US Dollar Exchange Rate Forecast: Will AUD/USD Rise on US GDP Slowdown?
The Australian Dollar (AUD) may have declined against the US Dollar (USD) recently, but has a chance of recovery before the weekend.
A revised reading for US GDP in Q1 2018 will be released on 27th April. This is predicted to show a slowdown from Q4 2017 with a reduction in GDP growth from 2.9% to 2%.
Amid background concerns about the US sustaining economic growth, such a result could weaken the USD and trigger an Australian Dollar to US Dollar exchange rate rise.
Next week, the Reserve Bank of Australia (RBA) will make its monthly interest rate decision on 1st May and a trade balance announcement will be made on 3rd May.
The RBA meeting might lower confidence among AUD traders if it proves to be another cautious affair – the Australian Dollar could fall in value in this case.