Australian dollar to us dollar exchange rate takes a dive as usd benefits from ‘perceived clinton win’ binary search algorithm

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The appeal of the higher-yielding Australian Dollar (AUD) exchange rate complex has been boosted as the latest US data proved rather mixed in nature

The Australian Dollar to US Dollar (AUD USD) exchange rate extended its decline towards the week’s opening levels on Thursday afternoon as the weak Australian Dollar was easily capitalised on by a surge in demand for the US Dollar.

Demand for the ‘Greenback’ was high when American markets opened as investors reacted to another perceived debate win for Democrat nominee Hillary Clinton, as well as hawkish comments from Fed policymaker William Dudley.

Contrary to expectations, September’s Australian unemployment rate clocked in at 5.6%, although this ultimately failed to support the ‘Aussie’.

This apparent improvement was ultimately down to an unexpected


decrease in the corresponding participation rate, suggesting that the domestic labour market is not as robust as might be hoped.

Risk appetite was somewhat supported by the third quarter Chinese GDP report, which offered further reassurance that the world’s second largest economy is avoiding a hard landing, at least in the near term.

As a result the Australian Dollar (AUD) was encouraged to trend higher, particularly as the Westpac Leading Index for September showed a modest uptick from 0.01% to 0.06%.

Even so, the Australian Dollar to US Dollar (AUD/USD) exchange rate struggled to substantially capitalise on this support, with the ‘Greenback’ still biased to the upside.

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Confidence in the AUD to USD exchange rate is likely to weaken, at least somewhat, ahead of Thursday’s Australian labour market report, which is notorious for its volatility.

Expectations are for September to have experienced a moderate uptick in employment, although this is forecast to accompany a rise in the corresponding unemployment rate from 5.6% to 5.7%.

This would undermine confidence in the robustness of the Australian economy, putting renewed downside pressure on the ‘Aussie’ and raising the possibility of the Reserve Bank of Australia (RBA) returning to a more dovish outlook.

On the other hand, if the report offers a stronger showing and points towards greater resilience within the domestic economy then the AUD/USD exchange rate could return to an uptrend.

Wednesday’s US housing data proved a little mixed, with building permits bettering expectations even as housing starts unexpectedly contracted -9.0% on the month.

This was not quite as encouraging as investors had hoped, prompting the ‘Greenback’ to weaken as confidence in the strength of the US economy faltered.

Nevertheless, markets are continuing to speculate on the likelihood of the Federal Reserve raising interest rates before the end of the year, something that looks set to keep the AUD/USD exchange rate on the back foot.

If investors remain confident that the Fed will raise interest rates imminently then the Australian Dollar is likely to trend lower ahead of the weekend as risk sentiment deteriorates.

‘We are relatively positive about the emerging markets and expect a gradual increase in commodity prices. Equity meaning Still, we expect the AUD to gradually drift lower as a result of less attractive relative yield once the Fed resumes rate hikes.

While waiting for the Fed’s next move, we can expect the range-trading to continue and daily moves to be driven mainly by general risk-on/-off sentiment.’

If polls continue to point towards a victory for Hilary Clinton in the US presidential election, meanwhile, then the US Dollar is likely to experience a further boost.

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