The AU Dollar to US Dollar is on an upwards move in October. After hitting the lows at 0.7170 levels, it shows steady growth, closing at 0.7421 for the weekend.
AU Dollar to US Dollar Strengthens
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The AU to US Dollar is trading at the October highs at 0.7421. It is moving between the 100 SMA placed at 0.7415 and the 200 SMA 200 at 0.7570. The area at 0.75 is a psychological resistance, beyond which the Aussie Dollar to US Dollar pair may race higher, as it is a major breakout level.
US Dollar to AU Dollar is on a downturn moving towards 1.3464 levels on Friday, October 15, 2021. The US Dollar to AUD is at the low levels seen last in the first week of September.
Australian Dollars to US Dollar in the foreign exchange market is trending stronger.
Economic Activities Improve in Australia
Economic activities in Australia are improving after the lockdown restrictions are slowly easing. Businesses are reopening, and retail sales show improvement.
NAB business confidence index saw a sharp surge to 13 in September. In August, it was at -6. The reopening of New South Wales after the lockdown and high vaccination drive is improving confidence in NSW and Victoria, says NAB chief economist Alan Oster. Business conditions have to recover, and employment levels have to become better to improve the conditions in Australia, says Oster.
AIG construction index has been doing well, moving higher from 38.4 to 53.3. It shows that the construction sector shows good expansion.
The trade balance has gone higher from 12.65 billion to 15.08 billion. Export demand shows improvement, resulting in increasing production for domestic manufacturers. An increase in exports is positive for the AUD/USD currency pair in the foreign exchange market.
The demand for LNG and coal is driving exports higher, pushing the AU to US Dollar upwards. The lockdown brought a slump in trade activities in Australia. The repeated virus attack brought closures to trade and production. Economic activities may improve further in the last quarter, which will drive the AU to US Dollar higher, state experts.
RBA Keeps Interest Rate Unchanged
The RBA expects better economic performance as the country gradually reopens after the pandemic. The RBA mentions that the interest rate rise will not happen before 2024. In the October meeting, the Reserve Bank of Australia keeps the cash rate target unchanged at 0.10% for the April 2024 Australian Government Bond. Quantitative easing will happen from February 2022, as the economy will show a rebound by then, say authorities.
The cautious approach taken by the RBA holds the AU to US Dollar exchange rate from moving above the 200 SMA regions.
Restrictions Eased in Sydney
Sydney faced severe covid-19 infections, and relaxations are taking place after a four-month lockdown. The removal of quarantine restrictions for tourists entering the country is positive for the Australian currency. Almost 70% received double vaccination in New South Wales, which encourages people to venture outdoors. Restaurants and cafes reopen, and people can dine out. The service section has many customers visiting the salons and beauty parlors.
Melbourne will reopen later this month, and Canberra will reopen by the end of the week, say authorities. The reopening after the lockdown in the country is a positive note for the AU to US currency pair on the forex market.
AU to US Dollar Affected by Chinese Economy
The Chinese economy is showing weakness, which affects Australia Dollar. The real estate sector in China is under stress. Most of China’s population show interest in the real estate sector. The Evergrande incident has hit the investment of most people in that sector. Though the government promises that the financial situation of the “Evergrande is controllable”, there is a negative sentiment creeping into the economy. The AUD/USD has high exposure to the Chinese economy.
US Dollar Index
The US Dollar Index faced resistance at 94.50 levels. There is weakness in the DXY as it trades at a one-week low at 93.93. It was trading above the 94.00 levels for two weeks in October but slumped at close on Friday, October 15, 2021.
The risk-sensitive Aussie shows better performance with good data from the US retail sales. Macroeconomic data in the United States are upbeat, lending support to the US Dollar.
Debt-ceiling decisions in the US have been put off, for now, bringing relief to investors across the globe. The Canadian Dollar, another commodity currency, is doing well, with the crude prices rising to multi-high levels.
AU to Yen on Uptrend
The AUD/JPY currency pair on the forex market moves with great momentum in mid-October. It surged from 80.45 to 84.79 within eight consecutive trading days.
The Australian Dollar shows a high correlation to the Japanese Yen. Australian exports have access to the Japanese market. Australia has a free trade agreement with Japan, which is driving exports from Australia to Japan higher. Australia exports dairy products, cereals, sugar, and sugar confectionery, and wood charcoal to Japan.
A strong momentum will drive the AU to US Dollar exchange rate higher in the forex market.