Multinational Trade Agreement Triggers AUD/USD Exchange Rate Advance
The Australian Dollar to US Dollar (AUD/USD) exchange rate has risen by 0.3% on 9th March, following Australia’s signing of the Trans-Pacific Partnership (TPP) trade deal.
The arrangement between 11 nations bordering the Pacific Ocean has reduced some of the negative effects of other global trade news.
This historic signing elicited a positive response from Trade Minister Steve Ciobo, who declared;
‘[This is a] very good day for trade.
The world will be drinking more Australian wine, eating more Australian beef and using more Australian services thanks to the TPP-11’.
Australian Dollar to US Dollar (AUD/USD) Exchange Rate Rise Limited after Steel Tariff Update
While the Australian Dollar has gained on the US Dollar thanks to domestic trading news, developments in the US have prevented a larger AUD/USD exchange rate rally.
Australia remains at risk of suffering punitive tariffs on its metal exports to the US, following President Donald Trump’s recent protectionist announcement.
The tariff legislation isn’t completely clear, but there have been vague hints that Australia could be excluded from the charges.
Speaking at a recent press conference, Mr Trump said that there would be a 15 day negotiating period for countries to enter the exemption category.
Specifically mentioning Australian-US trading, Mr Trump said;
‘We have a very close relationship with Australia. We have a trade surplus with Australia. Great country, long-term partner. We’ll be doing something with them’.
Just what this ‘something’ is remains to be seen, but optimistic speculators believe that it could be an invitation for Australia to be tariff exempt under certain conditions.
The majority consensus is that tariffs may harm the US and steelmakers across the world; so the situationhas ultimately limited AUD movement.
US Dollar to Australian Dollar (USD/AUD) Exchange Rate Declines on Concerns about North Korea Meeting
On the other side of the currency pairing, the US Dollar to Australian Dollar exchange rate has fallen because of trader uncertainty about a pair of ongoing events.
The first is the steel tariff plan, covered above, while the second is news of an apparent meeting between Donald Trump and Kim Jong-un.
The US President and North Korean leader are planning to meet ‘by May’, with the aim of defusing the current tensions about nuclear weaponry (among other issues).
The optimistic outlook is that the two men will set aside their differences and avert a nuclear war.
Less hopefully, other analysts have predicted that if the two leaders clash in their plans for nuclear armament, the situation may be worse for global peace.
Both leaders have strong personalities, so these fears are by no means unfounded.
Australian Dollar to US Dollar Exchange Rate Forecast: AUD/USD Losses possible on Worsening AU Confidence Stats
The Australian Dollar could fall back against the US Dollar in the coming week, when Australian confidence data will be released.
The NAB business confidence reading for February is forecast to drop from 12 points to 11 on 13th March, while Westpac is also tipped to show a consumer confidence dip on the day.
The coming week’s main US news will consist of inflation rate data for February, along with retail sales stats for the same month.
The inflation rate figures, out on 13th March, are predicted to show year-on-year growth.
Such a result could trigger a US Dollar advance because it would raise the chances of a Federal Reserve interest rate hike in the coming months.
Any gains on Tuesday could be built on when Wednesday’s retail sales data comes out, given that economists are forecasting higher monthly and yearly sales levels.