Australian Dollar comfortably holds above 75c
Daily Currency UpdateWhat a week for the Australian Dollar, against the Greenback the Aussie has been the best performer and has broken above the key psychological level of 75c which was a significant figure from a technical perspective. The main driver has been a surge in iron ore futures thanks to Chinese demand and a potential shortage in supply due to disruptions caused by storms hitting Western Australia. The local unit is closely correlated to commodity prices so it is no surprise to see the pair rise to these levels. Local markets shrugged off negative news regarding a vaccine being produced by an Australian firm CSL and the University of Queensland, the Australian government has moved to an alternative supply after trials returned a false HIV positive result.
The AUD/USD hit 29-month highs on Friday of 0.7571, up 2.7% on the week, From a longer-term perspective, this pair looks as if it has plenty of support near the 0.7400 handle, if the Greenback continues to slide and commodity prices rally on the back of a strong Chinese economy there’s no stopping the Aussie and may be looking towards the 0.7600 level, and then the 0.7670 level after that.
Key MoversFollowing a six-year low on the US Dollar Index (DXY) earlier last week, the DXY managed to rebound by Friday to hover around 90.95. Gold ended a roll coaster week higher as talks in the U.S. Congress for a COVID-19 fiscal stimulus package hung in the balance. Congress had originally passed in March the CARES Act which provided relief to many businesses and qualifying citizens, this is now all about to expire in a matter of weeks. The Democrats and Republicans have been locked in a dispute over how much stimulus the US economy needs, what form it should take and how it should be doled out.
The GBP continues to feel under pressure with the GBP/USD cross-rate falling further in the week touching a low of 1.3134 on Friday. As the Brexit deadline approached on the weekend Boris Johnson appeared ready to embrace a no-deal Brexit and prepared the Royal Navy gunboats to defend UK fishing waters. Talks continued through Sunday with the European commission president Ursula von der Leyen, where both parties have agreed that negotiators would go "the extra mile" in the next few days to reach a trade deal agreement that would guarantee Britain zero-tariff and zero-quota access to the EU's single market.
The EUR/USD moved sideways last week consolidating just above the 1.21 handle on Friday. We saw the pair travelling upwards to 1.2160 following the ECB stimulus increase however, on Friday a dovish speech by the ECB saying that they would be ‘vigilant’ on the exchange rate and will continue to monitor developments noting that recent appreciation put downwards pressure on Eurozone price growth saw the pair retreat.
- AUD/USD: 0.7450 - 0.7600 ▲
- AUD/EUR: 0.6140 - 0.6250 ▲
- GBP/AUD: 1.7210 - 1.7900 ▼
- AUD/NZD: 1.0520 - 1.0700 ▲
- AUD/CAD: 0.9560 - 0.9690 ▲