AUD/USD Exchange Rate Forecast: Australian Dollar Gains Thanks to US Trader Profit Taking

Trader profit-taking and a pause before the release of the important US Consumer Price Index has allowed the AUD/USD to trend upwards, with the ‘Aussie’ up 0.3% on the ‘Buck’.

AUD/USD Exchange Rate Forecast: Australian Dollar Trends Up on Positive Jobs Data

Australian labour market data had a similar effect on the ‘Aussie’ as US Non-Farm Payrolls did the ‘Greenback’ last week, seeing a bullish rise for the AUD/USD exchange rate. 58.6k new jobs were created – nearly four times the forecast rise – and unemployment surprised experts by falling -0.3%.

Minutes released from the November 3rd Reserve Bank of Australia (RBA) meeting have shown that policymakers continue to be relatively optimistic regarding the future direction of the Australian economy. The RBA decided to hold interest rates at a record low of 2% during the last meeting, but the minutes also highlighted some important positives and suggested that the economy was shifting away from relying heavily on mining, which would help to protect the ‘Aussie’ from future problems in China.

The RBA concluded that ‘Overall, the forecast for the Australian economy remained for growth to strengthen gradually over the next two years as the drag on GDP growth from falling mining investment waned and activity progressively shifted to non-mining sectors of the economy.’

The AUD/USD exchange rate is currently trending in the region of 0.7120.

USD/AUD Exchange Rate: Trader Profit Taking Causes US Dollar to Fall Ahead of Consumer Price Index Release

The US Dollar has experienced a bullish run since recovering from overvaluation fears in the wake of the stellar Non-Farm Payrolls figures released on the 6th of November. Since then the ‘Buck’ has been strengthened by positive data, which has further reinforced the idea that the Federal Reserve will raise interest rates. The USD/AUD exchange rate has slumped today due to trader profit taking and a pause before the all-important Consumer Price Index data was released.

Rising 0.2% Year-on-Year (bettering the forecast rise of 0.1%) the CPI provided yet more positive data to strengthen the argument for a rate hike. The Consumer Price Index Excluding Food & Energy remained steady at 1.9%. Experts believed the likelihood of an interest rate hike by the Federal Open Market Committee (FOMC) in December was a near-certainty even before these figures were released.

There are concerns that the horrific attacks in Paris on Friday could see the Fed less inclined to raise interest rates as traders turn to the safe-haven US Dollar. However, experts are predicting the terrible events will have little impact upon the Fed decision unless full-scale military intervention in the Middle East is instigated by NATO.

However unfounded, the fears are likely to have contributed to the sliding USD/AUD, which is currently trending -0.5% down between 1.4010 and 1.4135.

AUD/USD Exchange Rate Forecast: Key Australian Data Could Continue Uptrend as Traders Profit on US Dollar

The ‘Aussie’s bullish rise could continue, reinforced by the release of the Conference Board Leading Index, Westpac Leading Index and the Wage Cost Index, all due out during today’s Oceanic session. If these print positively this will give even more momentum to Australian Dollar growth, which is currently up around 0.5% against the Chinese Yuan Renminbi (CNY) and the Pound Sterling (GBP) and 0.7% against the Euro (EUR) and the New Zealand Dollar (NZD).
Trader profit taking will likely weaken the US Dollar for the time being, although as the next FOMC meeting in December draws closer, the ‘Buck’ is predicted to strengthen again thanks to the possibility of a rise in interest rates: a move which could end the ‘Aussie’s bullish run.

The AUD/USD exchange rate is currently trading between 0.7070 and 0.7136.