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Australian Dollar to US Dollar Exchange Rate Tumbles after Surprise Rise in AU Unemployment

Australian Dollar Exchange Rates

Rise in Australian Unemployment Rate Triggers -0.8% Drop in AUD/USD Exchange Rate

The Australian Dollar has fallen back against the US Dollar today, following the news that the AU jobless rate has unexpectedly risen in February.

The response from economists was cautious, as experts forecast that this result would mean no immediate action from the Reserve Bank of Australia (RBA).

Among the respondents was Craig James of Commonwealth Bank of Australia, who said;

‘There is no pressing need for the RBA to change interest rate settings.

Under-employment and under-utilization rates continue to trend lower but still indicate that spare capacity is available in the job market.

CommSec expects that the next move in [interest] rates will be up, but we can’t see a change happening until late 2018 at the earliest’.

US Dollar to Australian Dollar Exchange Rate Rises 0.6% after 2018’s First US Interest Rate Hike

The USD/AUD exchange rate has climbed today, thanks to the outcome of a Federal Reserve policymaker meeting on 21st March.

Fed officials hiked US interest rates from 1.5% to 1.75%, overtaking Australia in the ‘race’ to tighten monetary policy.

Federal Reserve Chair Jerome Powell, who took the job earlier in 2018, gave a cautiously optimistic assessment of the US economy after the vote, saying;

‘The job market remains strong, the economy continues to expand, and inflation appears to be moving toward the FOMC’s 2% longer running goal’.

Mr Powell’s remarks were not received with universal optimism, however, as by suggesting two more interest rate hikes in 2018 he downplayed trader hopes for a third.

Giving their feedback on the event, Bloomberg Economists Carl Riccadonna and Yelena Shulyatyeva said;

‘Powell showed important signals of continuity with [former Chair Janet] Yellen’s Fed.

Language emphasising ‘further gradual adjustments’ to interest rates was retained from Yellen’s final meeting, and the dot plot update remained centered on three hikes by year-end, although the distribution shows officials openly flirting with the possibility of a fourth hike.

The Powell Fed is proceeding with a similar sense of gradual deliberation, at least for now’.

Chance of Australian Dollar to US Dollar Exchange Rate Rise on Slowing US PMI Stats

While the Australian Dollar to US Dollar exchange rate may have taken a drubbing today, there could be a near-term recovery when US PMI readings for March come out.

Out this afternoon, the US composite and services PMI estimates for March are tipped to show slowing economic activity during the month.

Although the manufacturing PMI is forecast to rise for the initial estimate, a falling composite figure might mean that the US Dollar is ultimately weakened by the data.

The US Dollar will remain the dominant influence over the Australian Dollar for the rest of the week, as the next AU data is over a week away.

Friday may see the US Dollar fall further against the Australian Dollar, when durable goods orders and new home sales stats for February will be announced.

Orders during the month are tipped to remain negative, while the number of new home sales has been forecast to slow from 0.593m to 0.62m.