Australian Dollar Quiet on Wednesday Session

The Australian dollar, along with its peer of currencies, had a quiet session on Wednesday’s trade.

The AUD/USD exchange today stood 0.7575. It fell 0.08 percent or 0.0006 points. The AUD/JPY is at 83.99, falling 0.23 percent or 0.19 points; the AUD/CNH traded at 4.8120, slipping 0.14 percent or.0.0067 points; the AUD/GBP fell 0.09 percent or 0.0005 points to exchange at 0.5639.

On the other hand, the dollar stood higher on AUD/EUR, AUD/NZD, AUD/CAD exchange, exchanging at 0.6430, 1.0918, and 0.9711 respectively.

The dollar rose above 76 cent level in early European trade, its highest in a month, the AUD/USD slipped in New York amid renewed geopolitical caution towards US negotiations with China and Democratic People’s Republic of Korea (North Korea).

David de Garis, National Australia Bank’s Economist said, “President Trump has cast doubt on whether the June 12 summit [with North Korean leader Kim Jong-un] will take place.”

However, Trump hosed down optimism over trade negotiations with China, suggesting that “there is no deal”, showing ambiguity that the two sides were on the cusp on an agreement to reduce the size of the US trade deficit with China.

US Dollar’s Rebound

The US dollar’s rebound seen in April and May is resulted from higher American bond yields, which have reach multi-year highs on the recent weeks, at a time when currency markets have renewed their focus on interest rate differentials.

The 2-year US bond yield ballooned 2.57 percent this week. It is the highest level since the financial crisis. The 10-year yield, on the other hand, sits close to a multi-year high of 3.11 percent.

Meanwhile, Australia’s 2-year yield fell to 2.04 percent after reaching its peak of 2.14 in April. Its 10-year yield remained steady below 3 percent.

Elias Haddad, senior FX strategist at Commonwealth Bank of Australia (CBA) said that US will re-weaken and support a higher AUD/USD exchange. “We expect this for a number of reasons.”

Haddad and the CBA team forecast that the AUD/USD exchange rate will rise at a steady pace of one cent every quarter until on the middle of 2019. "In our view the fundamentals for AUD remain solid. Consequently, we expect AUD to consolidate in the 0.7400-0.7600 region in coming weeks and end 2018 high at 0.7800," he added.

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