What's ahead for the next week for the AUD?
The Australian Dollar appreciated sharply this week, soaring in response to a burgeoning market optimism.
This euphoria was driven by more positive coronavirus vaccine headlines as well as the news that EU leaders reached an accord on a $750bn coronavirus relief fund.
Investors are hopeful that these developments will help enable a V-shaped recovery in global growth through the second half of 2020.
Further buoying AUD exchange rates were comments from Reserve Bank of Australia (RBA) governor Philip Lowe, who suggested the ‘Aussie’ is broadly in line with the bank’s targets, dispelling speculation the RBA may try to talk the currency down following its meteoric rise over the past couple of months. However, it wasn’t all plain sailing for the Australian Dollar, with the risk-sensitive currency facing some headwinds in the latter half of the week amidst renewed tensions between the US and China.
Australian Dollar Forecast
Looking ahead to next week’s session, the Australian Dollar may continue to be driven by market sentiment. This could infuse the ‘Aussie’ with volatility depending on if US-China tensions continue to flare and whether this offsets hopes for a coronavirus vaccine. On the data front there will be a few economic releases which are likely to impact AUD exchange rates, including:
- Inflation
- Business Confidence
- PPI
Of these, the inflation figures from the second quarter are likely to prove most influential as some deflationary pressure could push the RBA towards more monetary easing.
In broader trade, the spotlight will be on preliminary GDP figures from the US and Eurozone. The releases will be the first look at how the two key economies fared during the second quarter and could prompt notable volatility if we see some dramatic plunges in growth.
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