Australian Dollar Volatility Ends in Lull Ahead Of US Data


The Australian Dollar has recently been displaying signs of volatility, with its price varying considerably against the US Dollar over the past few months.

From a low point in October last year, the AUDUSD pair went on a sudden rally, which lasted until December before beginning to fall flat during the course of January. As February drew to a close, the AUDUSD pair began to rise in value again, reaching 0.66251 on March 4, according to FXOpen charts.

Indicative pricing only

Over the past week, the Australian Dollar has been a bit dormant in its movements against the US Dollar; however, this morning's trading session in Australia and across the Asian market session began to demonstrate that some renewed interest is beginning to be shown in the Australian Dollar as the Australian economy begins to look a bit stronger.

This morning as the European markets begin to open, activity from the Australian market is being analysed and one matter of interest is that the Australian S&P index along with the ASX 200 which is an index featuring 200 well capitalised stocks on Australia's ASX exchange, showed improvement over previous performances which is being mooted as a potential strengthening factor for the Australian Dollar.

Today in Australia, financial services executives have held meetings to discuss the GDP within Australia for the fourth quarter of 2023, with nothing out of the ordinary having surfaced and data in line with expectation; however, there is anticipation regarding the forthcoming monetary policy announcements from the US Federal Reserve which may affect the value of the AUDUSD, and forthcoming CPI data in the United States for February looks set to meet expectations at 3.1, identical to that for January.

Speculation has begun to arise once again relating to interest rate reductions in the United States, with some reports this week anticipating that the Federal Reserve will begin to reduce interest rates in the United States in June this year.

This is being met with mixed views because the previous speculation, which was widespread and very high profile and stated that the monetary policy in the United States would be to begin reducing interest rates in the Spring, was incorrect as the Federal Reserve instead maintained rates at the current status quo. Given that CPI data in the US is not decreasing month on month and the Federal Reserve has postponed interest rate decreases so far because it is committed to reaching the sustainable 2% inflation rate, the jury is still out.

Therefore, today's AUDUSD pair has been trading sideways at 0.66156 at 7.30 AM UK time, according to FXOpen pricing, but a look at the chart pattern, which went before this lull, shows a great degree of volatility.

Clearly Australia's regrouping economic situation combined with the anticipation relating to the US monetary policy alongside an evergreen US Dollar which appears to be able to weather any storm is a conundrum for investors to look closely at, and the good performance of Australian businesses demonstrated by the indices looks to be adding a positive note for Australia's national currency.

Overall, these are two majors at other ends of the planet which are volatile when traded against each other as the two economies behind them track their substantial differences.

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This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.

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