The Australian Dollar traded in a wide range this week in response to domestic coronavirus concerns as well as the Reserve Bank of Australia’s (RBA) latest rate decision.
The 'Aussie’ initially opened the week on the back foot following the news that a state of disaster had been declared in Victoria in response to a spike of coronavirus cases in the region.
However it didn’t take long for AUD exchange rates to bounce back as the RBA delivered its latest rate decision.
The RBA opted to leave interest rates on hold as expected, and despite speculation it may raise concerns about the speed of the ‘Aussie’s recent appreciation the central bank kept shtum on the issue.
At the same time, the persistent USD selling bias helped to propel AUD exchange rates even higher in the middle of the week.
However, the Australian Dollar’s star began to fade in the latter half of the week in the wake of comments from Prime Minister Scott Morrison, in which he warned unemployment is expected to rise to 10% and the lockdown in Victoria could cost the economy up to AU$9bn.
Australian Dollar (AUD) Weekly Review
- AUD/USD trading at: 0.7192 – Up a cent on the week’s low
- AUD/GBP trading at: 0.5461 – Down a cent on the week’s high
- AUD/EUR trading at: 0.6061 – Unchanged on the week’s opening level
- AUD/NZD trading at: 1.0818 – Up a cent on the week’s low
Australian Dollar Forecast
Looking ahead to next week’s session, domestic coronavirus developments are likely to remain a key catalyst for the Australian Dollar, potentially driving the currency lower if the situation in Victoria continues to deteriorate or the outbreak spreads to other states.
On the data front there will be a few economic releases which are likely to impact AUD exchange rates, including:
- Unemployment Rate
- Business Sentiment
- Consumer Confidence
Of these the main focus will be on Australia’s latest jobs report. Expect to see the ‘Aussie’ come under pressure if the unemployment rate continued to accelerate in July as forecast.
In international trade, the publication of the UK’s latest GDP estimate is likely to weigh heavily on the Pound as economists predict a startling 20% plunge in growth in the second quarter. The Reserve Bank of New Zealand’s (RBA) rate decision will also be in focus. Will a more upbeat outlook from the RBNZ help to boost the New Zealand Dollar?
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