Fortunately for the Australian dollar, the commodity currency had been doing extraordinarily well in the current circumstances against many of its major counterparts even with the recent spike in Coronavirus. When it comes to the AUD to USD exchange rates, the outcome over the last 4 months couldn’t be more surprising as the US dollar, widely considered as the staple safe-haven currency, has seen significant weakness against the antipodean currency as the rate has climbed a staggering 24% since Mid-March moving from 0.57 to 0.71. The Euro has fared much better against the AUD either as the same time period has witnessed a 15% surge from 0.52 to 0.607 at time of writing. AUDGBP exchange rates have followed a similar trend to the AUD to EUR rates which peaked at 0.56 last week on an 11-month high. However, both the AUDGBP and AUDEUR rates have both weakened over the last week against the AUD which, in these turbulent and unprecedented times, could either be one of the many currency fluctuations the markets regularly experience or could be a telling sign that Australia could be in for tough times ahead if they cannot successfully tackle COVID-19.
Worst Day for COVID-19 in Australia to Date
Today marks the worst COVID-19 day on record for the Australian state of Victoria as the region added 13 confirmed deaths and 723 new cases which surpasses the record number on new admissions that was announced just earlier this week on Monday. This comes as very surprising news as the state capital of Melbourne is currently in a 6-week lockdown since 7th July which suggests that there is something the government have missed regarding what is continuing to drive cases upwards.
The recent outbreak has now brought total virus numbers to roughly 200 deaths and 16,000 cases. This could be a depressing sign for Australians in the region who may have to endure potentially extended lockdown restrictions and even further measures if spikes like these cannot be eradicated, even under the current protocol.
Mixed Bag of Data Releases for Australia in Coming Week
Although most of this week has been quiet for the Australian dollar, yesterday’s Consumer Price Index (CPI) suggests that Australia’s economy may be showing signs of struggling as figures drop from its previous 0.5% recording, past the 0.1% expected outcome to the actual -0.1% contraction as it stands on tract to reach record lows for spending within the country.
Next week Tuesday should be a day to watch as the Australian dollar forecast could weaken off the back of the plethora of highly volatile economic data releases. To begin, retail sales figures are expected to remain unchanged at 2.4% but if they mirror the CPI data this could fall below expectation. As an idea to how robust that is in other corners of the world, the Eurozone is anticipated for its Retail sales figure to contract further from -0.51 to -6.6 for the month of July.
The trade balance for June showing the difference between its import and export volumes looks set to be more promising with an anticipated 10% boost from US$8tn to US$8.7tn suggesting that the Australian government is really trying to push sales of its more luxurious exports of the meat and wine industries to keep the economy afloat. To finish off Tuesday, the Interest rate decision will be announced from the Reserve Bank of Australia governor Philip Lowe but with no statements suggesting that the rate will be change away from 0.25%, it is likely to disappoint the markets in providing any strength for the AUD.
With much of the Australian dollar’s strength being driven by its latest virus numbers and also the data-heavy Tuesday next week, it is certainly worth keeping up to date with the contemporary updates from your account manager here at Foreign Currency Direct to evaluate your trading positions involving AUDGBP.