Predicted GDP Growth of Billions by 2021 Pushes AUD/USD Exchange Rate Up
The Australian Dollar has risen by 0.3% against the US Dollar today, following an optimistic report from Microsoft and IDC Asia/Pacific.
The report suggests that AU$45bn could be added to Australian GDP by 2021, thanks to ‘digital transformation’ within the country.
Touting Australia’s potential for expansion, Steven Worrall of Microsoft Australia said;
‘Australia is clearly on the digital transformation fast track. Within the next four years, we expect to see an additional $45 billion of Australia’s GDP derived from digital products and services.
At the same time, organisations are increasingly deploying emerging technologies such as artificial intelligence as part of their digital transformation initiatives, which will accelerate growth even further’.
US Dollar to Australian Dollar Exchange Rate Declines as Analysts Consider Steel Tariff Plans
Recent US Dollar to Australian Dollar losses are partly down to continued uncertainty about US plans to impose tariffs on steel and aluminium imports into the country.
Although Australia has all but been exempted from these tariffs, there has been doubt over whoever either nation will truly benefit from such an arrangement.
Economist and former Reserve Bank of Australia (RBA) official Tim Harcourt was sceptical of the ability for exemptions to protect either economy, saying;
‘The big worry is that US trading partners will retaliate. There will be direct and indirect effects on Australia.
It appeared Malcolm Turnbull’s “100 years of mateship” visit to the US last month paid dividends when Australia was granted a tariff exemption on Saturday morning.
But it’s not good news if it means a return to protectionism, and the US is not a huge market for Australian steel compared to Asia.
If the US is isolated, Australia [could] be seen as safe, reliable and on side in the Asia-Pacific.
Ultimately, we will all be losers in a global trade war that will particularly harm the most vulnerable in all societies.
Even with an exemption for Australia (“mates rates”), the reprieve will not be worth it if a Trump-induced global trade war breaks out’.
Australian Dollar to US Dollar Exchange Rate Forecast: Are AUD/USD Losses ahead on Confidence Data?
The Australian Dollar’s recent advance against the US Dollar may not last over the week, as the week’s first major AU economic data has been forecast to print negatively.
This will consist of NAB’s business confidence reading for February, as well as Westpac bank’s consumer confidence figure for March.
At the time of writing, forecasts were for a decline in the NAB index from 12 points to 9, along with a consumer confidence dip from 102.7 points to 102.
Although forecast-matching reductions would be relatively minor occurrences, they could still lower AUD trader confidence given the current economic climate.
Looking at the US Dollar side of the pairing, the USD could appreciate against the Australian Dollar on 13th March when US inflation levels are reported.
Year-on-year inflation in February is predicted to rise from 2.1% to 2.2%, which could spark fresh hopes for an upcoming Federal Reserve interest rate hike.
Higher inflation will keep pressure on the Fed to consider raising interest rates, so a forecast-matching result could boost US Dollar demand.