Higher Australian GDP could Push AUD/USD Exchange Rate Up
Looking ahead, the AUD/USD exchange rate could recover on Wednesday when high-impact Australian GDP data will be released.
Levels of GDP growth are predicted to have risen during Q1 2018, for both the quarter-on-quarter and year-on-year readings.
Although GDP levels are only one factor that RBA officials pay attention to, two strong GDP growth readings could still raise hopes for a 2018 interest rate hike.
Are Even Greater AUD/USD Gains ahead on Australian Unemployment Rate Drop?
Next week will bring another opportunity for an Australian Dollar to US Dollar (AUD/USD) exchange rate rise, in the form of jobs market data.
Out on 14th June, these stats are forecast to reveal a drop in the unemployment rate during May, with a shift from 5.6% to 5.4% being estimated.
Falling unemployment is good news under any circumstances, but could end up boosting the Australian Dollar in the context of RBA interest rate hikes.
A lower unemployment rate will reduce the size of the labour pool in Australia, making it harder for employers to find the workers that they need.
In turn, this can lead to wages being increased as an added incentive from employers to get the required staff in a tight marketplace.
Higher wage growth is a strong factor in RBA interest rate decisions, so because of the implications, the Australian Dollar could rally next week on lower unemployment.
US Dollar Forecast: Will USD/AUD Exchange Rate Decline on Inflation Rate Slowdown?
For US Dollar (USD) traders, there may be losses against the Australian Dollar (AUD) next week when inflation rate data for May comes out on Tuesday.
This is predicted to show reduced levels of price growth during May, which may panic traders and cause a USD/AUD exchange rate decline.
Lower levels of inflation will reduce the likelihood of the Federal Reserve raising interest rates, as Fed policymakers will be under less pressure to act.
As with the RBA, other factors go into Fed interest rate decisions, but slowing levels of price growth could still worsen US Dollar exchange rates.
US Dollar to Australian Dollar (USD/AUD) Exchange Rate Advance Forecast on Fed Interest Rate Hike
Although slowing inflation rates could lower confidence among US Dollar (USD) traders, sentiment could be restored on Wednesday next week.
The Fed will be making its monthly interest rate decision for June and policymakers are still expected to vote for a hike from 1.75% to 2%.
Although this outcome has largely been priced in by currency traders, it could still trigger a USD/AUD exchange rate rise.
Such an action from the Fed would suggest that policymakers believe the economy is in good health and able to withstand the effects of higher interest rates.
On the other hand, if Fed officials defy expectations and leave interest rates untouched then the US Dollar could drop sharply because of trader disappointment.