Better-than-Expected AU Trade Balance Data Triggers AUD/USD Exchange Rate Rise
The Australian Dollar to US Dollar (AUD/USD) exchange rate has risen by 0.5% today, thanks to a surprise increase in March’s AU trade balance reading.
Experts had predicted a shrinking of February’s surplus to AU$0.65bn in March, but the reading instead grew to AU$1.53bn.
A higher trade surplus means that Australia is exporting more goods than it is importing, which implies a decreased reliance on goods from overseas.
Australian Dollar exchange rates have been further supported today by building permits stats for March, which have also defied forecasts.
The previous -4.2% drop in the quantity of permits granted had been projected to rise by 1%, but instead exceeded expectations and rose by 2.6%.
Profit-taking drags US Dollar to Australian Dollar (USD/AUD) Exchange Rate Down
The US Dollar (USD) has fallen against the Australian Dollar (AUD) and most other peers today, as part of a market reaction to the latest Federal Reserve meeting.
Fed officials haven’t adjusted interest rates, but have highlighted that inflation rates are moving closer to the 2% target.
This optimistic outlook led many economists to conclude that an interest rate hike is likely in June, which triggered a sharp rise in the value of the US Dollar.
In the wake of excessive USD trading, however, the US Dollar has since fallen in value across the board, despite the earlier positive influence from the Fed.
Australian Dollar to US Dollar Exchange Rate Forecast: Will RBA Policy Statement Trigger AUD Decline?
Despite today’s favourable trading, the Australian Dollar to US Dollar (AUD/USD) exchange rate could be on track for losses before the weekend.
The last major Australian data of the week will be a monetary policy statement, released by the Reserve Bank of Australia (RBA) on 4th May.
The current RBA guidance is that the next interest rate adjustment will be a hike instead of a cut, although it is unclear when policymakers plan to make such a change.
If the monetary policy statement gives no real indication of when the next interest rate hike could take place, the AUD/USD exchange rate could drop on trader disappointment.
There is an additional risk of Australian Dollar to US Dollar declines from upcoming US data, which may trigger a USD exchange rate rally.
The ISM non-manufacturing PMI result will be out this afternoon and might weaken the US Dollar if it shows a forecast-matching slowdown in activity.
More supportively, however, 4th May’s US non-farm payrolls and unemployment rate readings are both expected to print positively.
If April’s unemployment rate drops as expected and a large number of jobs are added to the US economy, the week could end with a USD/AUD exchange rate rally.