Trade in the Australian Dollar was mixed this week against a backdrop of broad USD weakness and worrying domestic statistics.
Through the first half of the week, the ‘Aussie’ was able to maintain an upward trajectory courtesy of a persistent USD selling bias as well as a modest improvement in risk appetite.
However, AUD exchange rates began to lose momentum in the middle of the week, with the publication of Australia’s consumer price index.
This revealed that the country fell into a state of deflation in the second quarter, stoking expectations that the Reserve Bank of Australia (RBA) will be forced to maintain its accommodative monetary policy for some time to come.
This gave way to some losses in the latter half of the week, after the state of Victoria reported a sharp spike in coronavirus cases, stoking concerns that Melbourne’s lockdown will need to be extended.
Australian Dollar (AUD) Weekly Review
- AUD/USD trading at: 0.7145 – Up a cent on the week’s low
- AUD/GBP trading at: 0.5506 – Unchanged on the week’s opening level
- AUD/EUR trading at: 0.6075 – Unchanged on the week’s opening level
- AUD/NZD trading at: 1.0771 – Up a cent on the week’s low
*Rates shown are market rates, not available to the public. Rates are current as at 30 July 2020.
What's ahead in the next week for the AUD?
Looking ahead to next week’s session, the Australian Dollar is likely to remain highly sensitive to market risk appetite. This could infuse the ‘Aussie’ with volatility as coronavirus developments continue to drive sentiment.
On the data front there will be a few economic releases which are likely to impact AUD exchange rates, including:
- RBA policy decision
- Retail Sales
- Trade Balance
The RBA’s latest rate decision will of course be the highlight for AUD investors. No policy changes are expected, but the ‘Aussie’ could face some headwinds if the bank maintains its dovish outlook.
In international trade, the Bank of England (BoE) will conclude its own policy meeting, with GBP investors watching closely for any mention of negative interest rates. On top of this, markets will also be focused on US non-farm payroll figures as well as Germany’s latest industrial data.
*Forecasts provided by TorFX TorFX Pty Ltd. AFS Licence number 246838. The information on this website has been provided for general information purposes only and must not in any way be construed or relied upon as personal advice.