The Australian Dollar US Dollar exchange rate plummeted throughout Thursday’s trade session as markets upped bets of a Reserve Bank of Australia (RBA) rate cut following a disappointing Australian employment report. Despite hitting its highest level since April (0.77) on Wednesday, the pair reversed this trend as the week continued.
Australian Dollar (AUD) Sold Across the Board after September Employment Results
The Reserve Bank of Australia (RBA) indicated earlier this week that it would decide whether or not further monetary easing was required in its November meeting, based on upcoming employment and inflation results.
Said employment results came in well below expectations when they were published on Thursday, causing widespread disappointment as investors began to bet that the RBA would restart its easing cycle much sooner than 2017.
September’s Australian employment change let down projections of a 15k improvement by slumping -9.8k, and the nation’s employment participation rate plummeted from 64.7% to 64.5%, indicating a lot less people were actively looking for work.
However, various economists (as reported by Business Insider Australia) have called the accuracy of the report into question, which allowed the ‘Aussie’ to recoup some of its losses during the European session.
US Dollar (USD) Holds Ground after Final 2016 Presidential Debate
Thursday’s Asian and European sessions didn’t see much bustle from the US Dollar, which quietly held its ground and trended firmly as markets waited for further reaction on Wednesday night’s final US Presidential debate.
The Mexican Peso (MXN), commonly seen as an indication of market sentiment towards the strength of Presidential nominees, saw little change in its movement, indicating that markets did not believe the debate altered the election’s chances considerably.
This means the US Dollar has seen little in the way of inspired movement in recent days, as Wednesday’s US housing data was widely mixed and left the ‘Greenback’ limp.
Thursday’s US data was mixed, with jobless claims coming in worse than expected but Philadelphia Fed’s Manufacturing score beating expectations. Despite this, USD strengthened when US markets began, as traders reacted optimistically to Wednesday night’s debate.
Australian Dollar US Dollar Exchange Rate Forecast: AUD USD Could Still End Week Higher
Despite the Australian Dollar’s Thursday plummet, the Australian Dollar US Dollar exchange rate is still likely to end the week above its opening levels.
As markets continue to speculate the reliability of Thursday’s Australian employment data, the ‘Aussie’ as well as risk-sentiment as a whole could even recover slightly on Friday. As a result, AUD USD losing all of its weekly gains is highly unlikely.
If US election polls taken since the final debate indicate any significant shift in sentiment for Hillary Clinton or Donald Trump, this could also affect risk-sentiment. Risk appetite would benefit from market stability – which translates as a stronger lead for Clinton.
Friday’s trade session in general is unlikely to see much direct influence on Australian Dollar or US Dollar exchange rates. It is more likely that global crossflows will affect movement.
Canada’s September Consumer Price Index (CPI) scores will be published during Friday’s American session, which may influence risk-sentiment slightly depending on the strength of the results.
At the time of writing, the Australian Dollar US Dollar exchange rate trended at around 0.76, while the US Dollar Australian Dollar exchange rate traded above 1.30.