Australian Dollar maintains its impressive recovery after taking a rebound from the lowest levels it traded at last week. It explains the strong come back of the Australian Dollar which resumed to rally against the weakened US dollar. As of 14 January 2019, the Australian Dollar stands at USD 0.720.
In the first week of 2019, the foreign exchange market pulled the Australian Dollar down to USD 0.687 least when the market participant could expect; the Australian Dollar made a rebound with a positive change of as much as 0.58% to US Dollar 0.722. That means against 1 Australian Dollar you can purchase a foreign currency of 0.722 USD.
These upward trends seem to be driven by the US-China trade talks when both the economies were seeking to reach the breakthrough. The crude oil prices have also witnessed a surge of nearly 5% owing to Saudi output cuts and talks between the United States and China.
Concerning UK Pound, an Australian dollar stands at 0.561 GBP whereas, for European currency, the Australian dollar is trading at 0.6286 Euro. The positive momentum in AUD/USD underlines the recent strength seen in Chinese yuan along with softening of interest rates. The People’s Bank of China has slashed the reserve requirement ratio (RRR), lowering the Bank’s reserve requirement.
Moreover, Australian retail sales have witnessed a significant growth on the back of pre-Christmas shopping which has eventually led to the economic growth of Australia’s last quarter of 2018. When market participants were betting a marginal increase of 0.3% in retail sales figures, Australian Bureau of Statistics (ABS) revealed the better than expected results. In the past week, ABS reported a 0.4 percent gain in retail sales in November compared to October on a seasonally adjusted basis.
Following the release of stronger-than-expected results, Australian Dollar jumped to highest levels not seen since mid-December. However, it is expected the gains in November 2018 reflects the hike in household consumption compared to the third quarter’s slower than expected growth.
Going Forward, the Reserve Bank of Australia continues to expect an uncertain pattern in household consumption with job growth softening over time while wage growth expected to trend at a slower pace.
On the rates front, Federal Reserves is expected to hike rates twice in 2019 and RBA is likely to introduce a marginal rate cut by the end of 2019. It is supposed to be the time when Australian Dollar could be trending at around 73 US cents.
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