Australian Dollar reaches three year high
Wednesday 24 February, 2021
Daily Currency UpdateThe Australian Dollar stormed through 78 US cent resistance levels with little effort on Friday evening, rising 1.3% on the day and ignoring a slump in equity prices. Opening at 0.7780 there was an initial movement lower to intraday lows of 0.7750 as an interim release of retail sales to cover the impact of COVID-19 were disappointing. The seasonally adjusted figure of 0.6% was well short of the 2.1% expected during the month of January.
All the action happened for the Australian Dollar in offshore trading as risk appetite continues to be positive due to a boom in commodity prices. Base metals such as copper reached $10,000 a ton while Nickel (Australia expects approximately 25% of the global output by 2030) saw its highest price since 2014. The march towards 80 US cents gathered momentum as AUD/USD closed at 0.7866.
The Australian dollar opens at 0.7870. We expect support levels to hold on moves approaching the 78 US cent handle, while any upward push will likely meet resistance at 0.7910.
Key MoversThe US Dollar Index declined 0.25% on Friday evening to 90.36 as riskier assets were in favour this week. The announcement of newly elected president Joe Biden's proposed $1.9 trillion coronavirus relief package spurred on hopes that there will be an improvement in the world’s largest economy in 2021.
Coronavirus numbers on the 7-day average continued to see lower lows as vaccines are rolled out globally. G7 leaders met virtually on the weekend releasing a statement pledging the need to distribute vaccines into developing countries. Both British Prime Minister Boris Johnson announced the donation of UK’s surplus and US President Joe Biden a $4bn commitment to the global COVAX alliance.
On the data front it was dismal retail sales figure in the United Kingdom as the UK’s third lockdown saw retail sales fall more than 8% for the month of January. Despite the poor figures, Sterling closed nearly at record highs and a touch under the 1.40 handle against the US Dollar. EUR/USD also edged higher (0.2%) following a mixed release of manufacturing and services PMI release in Europe.
This week all eyes will be on UK PM Boris Johnson who expects to provide further updates on UK lockdown restrictions. Federal Reserve Chair Jerome Powell is also due to testify before the senate banking committee for the first time this year in Washington DC. While House Democrats are planning to vote in regard to President Biden's COVID relief bill this week.
- AUD/USD: 0.7800 - 0.7900 ▲
- GBP/AUD: 1.7600 - 1.7950 ▼
- AUD/NZD: 1.0750 - 1.0820 ▲
- AUD/EUR: 0.6440 - 0.6530 ▲
- AUD/CAD: 0.9870 - 0.9950 ▲