The AUD has struggled to maintain its rally this week despite upbeat Australian unemployment figures. However, further scrutiny of the results shows that job growth slowed in January. The markets are concerned that the end of the government’s JobKeeper scheme will be followed by an increase in unemployment, with businesses being kept afloat by the additional funding likely to struggle in its absence.
The AUD hit resistance against the NZD over the last few trading days, with both a pessimistic view from the RBA and mixed jobless claims to blame. The markets are looking ahead to New Zealand’s inflation figures which are expected to follow the positive data the country has witnessed recently. A strong result here will heighten expectations of an interest rate increase in the not-too-distant future. As the lockdown measures in Auckland are scheduled to relax, we may start to see the NZD firm up again.
The AUD fell against the USD this week after better-than-expected US retail sales data surprised the markets on Wednesday. The AUD has had a fantastic run in the last 12 months and has performed well this year due to high commodity prices, but rising US treasury yields have provided support to the safe-haven USD. The next few months will be key for the AUD: with the reflationary theme expected to strengthen, the risk-sensitive Aussie may propel to fresh multi-year highs.
The AUD has been unable to break out of the range it has been trapped in against the GBP since the end of January. With less than 1% movement in three weeks, the risk on environment and high commodity prices has not outshone the UK’s well-received vaccine rollout. The markets are anticipating that the UK’s harsh lockdown restrictions will soon be relaxed and the economy will recover quickly — bringing the GBP with it. Today (Friday 19th February 2o21) sees the release of UK retail sales and services PMI data: the expectations are mixed, but a good result could see the AUD trade lower.
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