Australian Dollar exchange rates have remained stable against the USD, EUR and GBP over the course of the trading week and this has been despite poor unemployment figures released yesterday.
Stats on Thursday showed that unemployment had risen to 7.4% in June, which is the highest level seen in Australia since 1988 and casts a worrying forecast for future economic performance.
Youth unemployment seems to be rising with the greatest pace, sitting at 16.4% and with 17.1% of young males currently out of work.
Even with this data, which in normal circumstances you would expect would weaken a currency quite considerably, the Australian dollar has shown that it has a back bone and does not seem to have been hit too hard, but I guess we must remember that these are not normal circumstances!
AUD USD interbank exchange rates are currently sat just under the 0.70 level and having pushed through this on a couple of occasions this week, this may be seen as a key resistance level and a pivotal point for the pairing in the near future.
Both currencies are open to any news on a second phase of the virus, when the first phase really started to take a grip however it was USD that won the battle and the rate actually dropped below 0.60 for a short period of time.
Could a Second Phase Lead to a Different Outcome?
It may do, due to the vast issues that the U.S is experiencing and the fact the Australia has fared much better to this point, but in times of global uncertainty you can often see investors flock to the U.S Dollar, so a second phase may see a similar pattern.
Currently there are concerns of rising cases in areas around the world and also little pockets and areas that have led to local lockdowns, so you cannot rule out another big market swing due to the virus, but as you can imagine this is quite a lottery and almost impossible to predict.
What is also clear is that the U.S not only has a period of economic issues approaching but also political instability in on the horizon, with an election due on November 3rd.
Currently it is neck and neck between Trump and Biden, so the uncertainty over who may be steering the ship moving forwards may lead to investors heading away from the Dollar as the elections approach which may bring USD weakness in the coming months.
AUDEUR Exchange rates
Australian Dollar to Euro interbank exchange rates are currently sat just above the 0.61 level and have slightly strengthened over the course of the week, the pairing has slowly gained strength over the past month. There are still issues within the Eurozone as many countries continue to argue over the plans to issue mutualised debt through shared bonds. Austria, Denmark, the Netherlands and Sweden still strongly oppose this move so we may see a little Euro uncertainty as this situation evolves, but if they do get it finalised then it may be seen as positive news for Euro and EUR may have further gains to make.
AUDGBP Exchange Rates
AUD GBP interbank exchange rate Is sat higher in the 0.55s at present (close to 1.80 on the reciprocal) and the rate hasn’t budged too much over the course of the trading week.
Both sides have shared fairly poor economic data over the course of the trading week, which has balanced the pairing out, but I feel the key driver for GBP in the coming weeks will be any news on Brexit.
Realistically the U.K and EU have to have come up with a light agreement or plan in the next 8 weeks in my opinion, to give businesses the chance to prepare for whatever the outcome may be.
Negotiations are ongoing throughout July and it does feel that there are signs from both sides that a compromise could be found.
If the talks fall through then expect significant Sterling weakness, however if they do make a major breakthrough then these levels to sell Australian Dollars and buy pounds may be short lived as Sterling may have a big boost.
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