The Australian Dollar continued its momentum into Thursday, gradually increasing towards the 0.73 level. The catalyst for the shift was a broad-market sell-off of safe-haven currencies, including the JPY and USD, as risk-sentiment decidedly shifted post-US-China trade war announcement. Opening this morning at 0.7284, the Aussie looks poised to test the critical psychological level of 0.73.
The week was relatively lackluster on the Australian side of the pair with the RBA delivering the official neutral statement it has for over two years earlier in the week. The drivers of the recovery continue to come from off-shore forces. Besides the softening Greenback, the Aussie also found support from rallying commodity markets. The CRB Index, a basket of 19 commodities, rose significantly to challenge 193.65, a healthy gain from its June low of 164.54.
Chinese headlines also assisted the Australian Dollar in their recovery with President Xi stating that China would reduce tariffs on goods from most of its major trading partners. The average tariff rate could be significantly reduced as early as next month, potentially assisting Aussie exporters in accessing one of the world’s largest markets a little easier.