The Australian dollar looks set to continue it’s impressive climb since the start of April against the US dollar, having gained a further 1.4% overnight as a result of a surprisingly positive set of international trade data from China.
Indeed, the latest Chinese import and export figures came out far better than expected. Although both posting minor contractions, given the current crisis across global markets, the Chinese trade balance was predicted to drop considerably. In the end, exports came out at 11% higher with imports 3% better off.
As a result, this could prove particularly pivotal for AUDUSD exchange rates. Given the close trading relationship between China and Australia, investors have historically felt more confident backing the Australian dollar when the Chinese economy is showing signs of stability. It will be interesting then to see if this latest set of data provides an extra layer of support for the Aussie dollar, particularly as the markets await the key employment data on Thursday. Currently the interbank exchange level for AUDUSD is trending between 0.63 and 0.64, it’s highest level in over a month.
Employment data to set the trend for AUDUSD as week comes to an end
Importantly though, the markets have forecast a jump to over 10% in unemployment ahead of Thursday key jobs data, with many hinting it could have been well over the 15% mark without the $130 bn jobkeeper allowance scheme put forward by the government last week to help bridge the widening gap the virus is causing within the Australian economy.
Depending on how far Thursday’s release pushes past that 10% mark, we could see added volatility for Australian dollar exchange rates, potentially putting that 0.64 level under pressure as a result.
This is particularly relevant now given how average earnings and indeed the minimum wage debate remains at the centre of parliamentary debate in Australia. Just yesterday, Labour leader Anthony Albanese criticized government for going back to the $40 per day scheme, the abolishment of which earned the current coalition a fair amount of support throughout 2019.
USD trade data the early market mover
As we come out of the Easter bank holiday weekend though, this afternoon’s trade data from the US could prove to be the early week definer for AUDUSD exchange rates. The positive china trade balance posted last night may have sent early signals that the global outlook may not be so bleak as initially forecast. Typically, when world markets are under pressure, the US dollar benefits as a result of it’s safe haven status. It will be interesting then to see how the markets react should the US also surprise the markets in the same way China did overnight. As a result, this afternoon’s release is worth monitoring if you are in the market for US dollars this week.
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