The Australian dollar strengthened across the board against its major counterparts on Tuesday, with risk sentiment risking among investors. Two of the main drivers behind AUDGBP, AUDEUR and AUDUSD gaining in value were the EU’s agreement on a €750bn coronavirus recovery plan, coupled with comments in a speech by RBA governor Philip Lowe. AUD also started the week off on the front foot, on the back of news that Coronavirus vaccine testing at Oxford University is showing signs of creating immunity to the virus.
As a commodity-based currency it is typical to see AUD gain significantly in times where risk sentiment amongst investors is higher. Throughout yesterday’s trading, AUDUSD gained by almost 1.5% and AUDGBP by 1%. If you are currently holding AUD you are looking to sell, now could be a great time to get in contact with us to find out how our specialist currency service at Foreign Currency Direct could help you take advantage of this spike in AUD value, which are close to some of the best levels to sell AUD in 12 months.
Positive Vaccine Tests Boost AUD Value
Although there is still much work to be done, the initial testing of the Coronavirus vaccine developed in Oxford University has been positive and there are fresh hopes this could help lead to a treatment to the virus becoming administered globally by next year. Professor Gilbert from the University of Oxford stated after the results were published: “There is still much work to be done before we can confirm if our vaccine will help manage the COVID-19 pandemic, but these early results hold promise.” News of this story is likely to continue to have an impact on the value of AUD moving forward and is worth following if you have an upcoming AUD transfer.
This news helped AUD start the week off positively across the board and was further bolstered on the news that the EU have agreed their Coronavirus recovery programme to help ailing economies in the bloc withstand the aftereffects of the lockdown measures implemented in recent months. Although this news is likely to see the euro gain moving forward due to the solidarity within the bloc it highlights, it has seen the single currency fall in value against many of its major counterparts including GBP and AUD as it has been the catalyst for a shift in investor risk appetite.
AUD Reaction to RBA Meeting Minutes and Lowe Speech
In the early hours of this morning following the latest minutes from the Reserve Bank of Australia (RBA) policy meeting, comments from governor Philip Lowe have helped cement AUD’s recent move. There were attempts to weaken the currency, with Lowe admitting he would like to see AUD lower in order not to price out their exports but confirmed that the exchange rate is “broadly aligned with its fundamentals”. There was no change to interest rates in the latest meeting, but Lowe did confirm that the RBA would not rule out a change in policy “if circumstances warranted” and clarified that “negative interest rates in Australia remain extraordinarily unlikely.”
Another key factor to keep an eye out for regarding the future of AUD is the government’s controlling of COVID-19 which has seen localised lockdowns reintroduced in areas where a spike in cases had been seen. When these measures were announced a few weeks back we saw AUD weaken as a result. Cases across the nation passed the 12,000 mark earlier this week, much lower than in many other economies, but these lockdown measures will likely hamper the economy when many others are starting to reopen, and this could see AUDGBP weaken further going forward.
Other data releases to look out for later this week that could affect AUD value include the National Australia Bank’s business confidence numbers on Thursday morning, which will give a good indication of how businesses are coping with the current climate and where they see future activity. Friday also sees Manufacturing and Services PMI which should also give a good indicator in to how the economy is performing.