The Australian dollar was lower on the day against the Pound as better-than-expected UK employment figures boosted the British currency outlook against the Aussie dollar. The AUD v GBP pair was trading 1.0% lower in the European trading session at 0.4940 as the psychological 0.5000 level gave way and the Australian currency failed to find buyers.
Virus Hoarding Leads to Rationing in the UK
Continued fears over the spread of the Coronavirus has seen panic buying in the UK and supermarkets are now acting to ration certain products. Retailers have also warned the government that rioting, or civil disobedience could occur in the coming weeks and months if the situation hasn’t been resolved.
The UK has seen an outbreak of panic buying in consumer staple products and supermarket shelves are now empty in some stores, alongside the shutdown of pubs and retail establishments. This dynamic has the potential to reverse the recent weakness in the Australian dollar if investors see the British currency outlook weakening.
UK Employment Data Boosts the Pound
The pound was boosted by employment data that was better-than-expected but the figures did not move the market in a significant way due to the recent weakness over the Coronavirus. In a stable market, the economic data is a key driver of currencies and monetary policy, but the market has been rocked by the Coronavirus outlook and traders are ignoring the usual drivers to focus on external events.
The next key data event for the Australian dollar is Thursday’s employment change release. The employment number has been a key driver of the Australian Reserve Bank’s monetary policy as the bank have continued to base their policy decisions on the health of the Australian jobs number.
A better-than-expected number could see a rally in the Aussie currency as traders’ re-price their expectations for the Australian economy and the potential for rate cuts or stimulus measures from the reserve bank.
After deep rate cuts from the US and New Zealand central banks, it is not expected that the Australian bank will show restraint, so the current trend of Australian dollar weakness will continue. If the Australian jobs number is higher than expected, then the Aussie can see a long-awaited recovery. If the number disappoints then the RBA will be expected to join the list of banks to cut rates and announce stimulus packages.
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