Over the past 48 hours the Australian dollar has made gains against most major currencies. Being viewed as a riskier currency, we tend to see that in times of global troubles and turmoil the Australian dollar can tend to weaken and whenever that trouble seems to dampen we see the Australian dollar fight back.
Strangely, through the last few weeks the Australian dollar has gained over 5% against the U.S dollar even with the pandemic still causing problems for various economies around the world and despite the Reserve Bank of Australia Governor Philip Lowe earlier this week laying out his thoughts on what might be coming next for the Australian economy. He painted a fairly bleak picture of a 6% drop in economic performance, 10% unemployment and wage growth dropping below 2% and being likely to stay there for many years to come.
China has lifted various lockdowns and seems to be back in action which will likely help lift the Australian dollar’s spirits, and the U.S does appear to have been hit significantly by COVID-19 so on that front, this could be another reason why AUD to USD has fought back.
We do also need to remember that despite the gain of 5% this month, the AUDUSD exchange rate is still actually down by over 8% this year so there is a long way to go for the Australian dollar to get back where we started the year against the dollar.
All in all this market has the potential for severe volatility at any time and I do expect to see that at times in the coming months.
We offer a number of tools to help you mitigate the risk of changing currency markets, such as a market order, which works 24 hours a day, meaning that if there is a big shift in rates overnight whilst you are asleep and the rate you have been waiting for comes available, we will complete your currency purchase on your behalf, which is particularly helpful in the current market conditions.
If you have a transaction to carry out involving this pairing or any major currency at all then it may be prudent to get in touch with us by filling in the form below to discuss how we can assist you.