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Australian Dollar US Dollar (AUD/USD) Exchange Rate Steady, US-China Trade Deal Hopes Rise

November 18, 2019 - Written by John Cameron

AUD/USD Exchange Rate Rangebound, US-China Trade Developments in Focus

The Australian Dollar US Dollar (AUD/USD) exchange rate held steady today, with the pairing currently trading around US$0.681 after the risk-averse ‘Aussie’ benefited from increasing optimism around a ‘Phase One’ US-China trade deal.

China’s news agency, Xinhua, reported that talks between the two superpowers over the weekend were “constructive”, further boosting market appetite for Australian Dollar (AUD).

However, The Bank of America Merrill Lynch were downbeat in their report:

‘We think trade-war pain is high enough to motivate a ceasefire for the US election year, but the underlying motivation for the war remains.’

‘Businesses that have been holding back investment due to trade-war concerns know this and will likely have a tepid response to a ceasefire.’

The AUD/USD exchange rate failed to make any significant gains, with Australian markets remaining cautious over a potential flare-up between the two superpowers.

Meanwhile, Australian Dollar investors will be looking ahead to today’s speech by Christopher Kent, the Assistant Governor at the Reserve Bank of Australia (RBA). Any dovish comments about the economy could weaken market appeal in the ‘Aussie’.

USD/AUD Exchange Rate Flat as Safe-Haven Appeal Eases

The US Dollar (USD) failed to gain on the Australian Dollar (AUD) as safe-haven market appeal continues to slip on rising hopes of a US-China trade deal.

Lee Hardman, an Analyst at the Mitsubishi UFJ Financial Group, said:

‘Market participants remain optimistic that a partial US-China trade deal will be signed soon and have welcomed tentative signs of economic improvement outside of the U.S., especially in the [Eurozone], both of which are eroding the relative appeal of the US dollar.’

With no notable US economic data due out until tomorrow, the USD/AUD exchange rate will continue to be driven by global economic developments around Washington-Beijing trade relations.

AUD/USD Outlook: RBA Meeting Minutes in Focus

Australian Dollar (AUD) investors will be awaiting tomorrow’s RBA Meeting Minutes, with any dovish comments about the health of the Australian economy likely to provide downward pressure on the AUD/USD exchange rate.

Meanwhile, US Dollar (USD) traders will be looking ahead to tomorrow’s release of October’s US building permits figure, which is expected to ease from 1.391 million to 1.385 million.

Tomorrow will also see the release of October’s US Housing Starts, which are expected to improve at 1.32 million.

The AUD/USD exchange rate will continue to be driven by US-China trade developments, with any signs of a trade deal emerging between the two superpowers benefiting the risk-sensitive Australian Dollar.

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