Time and time again the Australian dollar forecast has been showing the world just what unprecedented times we currently live in. The plucky commodity currency has been doing incredibly well against its major currency counterparts despite the global uncertainty the pandemic has created.
AUD exchange rates have been very strong recently against the most heavily-traded currency of the US dollar even despite the state of Victoria’s capital, Melbourne, going into strict lockdown on 3rd August. The antipodean currency gained 0.5 cent on the Pound and a surprising cent against the USD within just 2 days of the announcement.
Initial Spikes in COVID-19 Cases Lowers as AUD Continues to Make Gains
It came at a time where the state of Victoria recorded its high daily cases ever at 725 on the 3rd August which has since been easing down to the 300-400 regions. It has however been receiving an increase in daily deaths with 19 recorded last Monday adding to the total death toll by COVID-19 at 375 deaths.
Despite the variance in cases and deaths in Australia, there is no doubt that the Australian dollar has been making significant gains as it now stands at a staggering 17-month high against the USD at 0.715 at time of writing. This now puts the currency pairing 1.5 cents better off than its recent pre-COVID high of 0.7 on the 31st December 2019 – a milestone for the AUD as its has regained all its lost ground with some interest returned on top.
Where Sterling exchange rates are concerned, despite having dropped off from its 0.56 peak high at the end of July, the AUD has been attempting to regain lost ground but has been flat-lining for the past few days with relatively stagnant movement. The Euro follows the same picture too as there has only been a 1 cent movement on the AUD to EUR pair between 0.6 and 0.61 recently.
Job Numbers Rebound but Unemployment Remains High
From an economic data standpoint, yesterday’s Australian unemployment figures have bounced back for the second consecutive time as July witnessed an additional 114,000 jobs enter the market and, albeit less than the 210,000 recorded in June, is a step in the right direction for the economy. Unemployment still remains high at 7.5% though and with the lockdown measures in Melbourne still strictly implemented, this could have negative implications for the economy unless Coronavirus cases continue to fall.
Economy data for next week is very light on the ground so any volatility for the Australian dollar will likely be driven by any developments in the pandemic or movements in currency strength from its counterparts. The only report that could carry any weight would be on Tuesday which comes from the Reserve Bank of Australia on its meeting minutes. This comes two weeks after the unchanged interest rate decision remaining at 0.25%. it will however provide some insight into the sentiment of economic outlook and should this appear hawkish in the markets, could see some further strength for the AUD.
Get in touch using the form below to discuss these factors in further detail. I’ll be happy to respond to your enquiry and discuss the ways in which you can limit your exposure to the changing currency market.