USD AUD Exchange Rate Slides as Fed Appears to be in No Hurry to Hike Rates

March 24, 2017 - Written by Toni Johnson

STORY LINK USD AUD Exchange Rate Slides as Fed Appears to be in No Hurry to Hike Rates

After drifting higher overnight the USD AUD exchange rate plateaued this morning as investors await the result of the US House of Representatives vote on Trump’s new healthcare plan.

US Dollar Australian Dollar (USD AUD) Paralysed as Trump Faces First Real Test

The US Dollar Australian Dollar (USD AUD) exchange rate remained largely unmoved in trading this morning as investors move cautiously ahead of a key vote on Trump’s healthcare bill.

Trump’s attempt to pass his American Healthcare Act (AHCA) to replace ‘Obamacare’ is seen as a major milestone for his presidency and the first real test of his legislative clout, with markets predicting an end to the US Dollar’s ‘Trump Jump’ if it fails to pass.

USD investors are expected to question Trump’s ability to pass his proposals for tax reforms and his infrastructure stimulus package if the healthcare bill fails, likely prompting a fall in the ‘Greenback’.

Ipek Ozkardeskaya, senior market analyst at London Capital Group, said;

‘A validation would ... grant Trump the credibility on his ability to pass through his fiscal policies, including tax reforms and large infrastructure spending. An eventual failure could let down investors.’

After the vote was delayed on Thursday Trump issued an ultimatum to force the vote on the bill today, with his administration telling Republican legislators that if the legislation failed Obama’s Affordable Healthcare Act (AHA) would be left in place as Trump moves on to other policy agendas.

Australian Dollar Retreats Overnight

The Australian Dollar declined by nearly half a cent Thursday evening although there appeared to be little to motivate such movement, with iron ore rebounding 1.6% to $86.36 a tonne after falling around 7% over the previous two sessions.

Rodrigo Catril, currency strategist at the National Australia Bank said;

‘The currency fell about 40 pips and it has stayed around that level for most of the night. The move was not triggered by any specific news and, unlike yesterday, commodities had a reasonable night with iron ore up 1.6%, aluminium 0.5% and copper 0.3%.’

The only notable news from the Asian trading session was a Japan’s Manufacturing PMI flash, which fell from 53.3 to 52.6, which may have caused a slip dip in AUD sentiment with Japan accounting for around 16% of Australian exports.

USD AUD Exchange Rate Forecast: US Manufacturing PMI Ahead

The USD AUD exchange rate may push slightly higher this afternoon following the release of the latest US Manufacturing PMI as economists predict that activity in the sector will have risen from 54.2 to 54.8 in March.

Meanwhile AUD investors will have to wait until Monday for the next economic data from Australia with the release of domestic Retail Sales Figures for February, with the ‘Aussie’ likely to advance if sales continue to show growth.

Current Interbank Exchange Rates

At the time of writing the USD AUD exchange rate was trending around 1.31 and the AUD USD exchange rate was trending around 0.76.

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TAGS: American Dollar Forecasts