Following the significant weakening the Australian dollar saw at the back end of September, the commodity currency has rebounded robustly and sits on multi-week highs against some of its major currency counterparts. We’ve seen some Australian dollar strength against the US dollar, with AUDUSD bolstered by over 1.5 cents in the last 10 days which could well continue considering the recent news that US President Trump now has coronavirus and, in the lead up to the election on 3rd November, may create increased uncertainty for the USD. AUD/EUR mid-market exchange rates have also fared roughly the same with the pairing up 1.1 cents since the end of September to the current 0.6110 at time of writing. Sterling has been the best of the three pairings but still lost 0.7 cents as the antipodean currency surges forwards.
It comes at a time when the Australian government has recently announced that it will be opening a “travel bubble” to its next-door neighbour New Zealand. The kiwis have only received a handful of deaths from COVID-19 and having seen Australia’s cases number in states such as Victoria ease off, the 2-week isolation period for travellers moving between the two nations will cease come 16th October. This will generate some positivity for AUD rates and potentially even the New Zealand dollar as well considering that many countries globally are considering or already in a partial or full national lockdown at present in what has been confirmed as a second wave.
Despite the economic benefits both sides will receive from people able to go holidaymaking more freely, there are still concerns to be mindful of. Such considerations come in the form of the increased mixing of people as the restrictions are lifted could generate an increase of new virus cases. Time will tell but this still raises the risks as some may considering New Zealand opening itself up to Australia prematurely.
Any additional movements for the antipodean currency may come on Tuesday as tomorrow will bring the national trade balance which is expected to shift from August’s 4294mn to 5154mn for September. Trade balance is the difference between a country’s export volumes vs its imports and thus, gives a general consensus as to the growth of the Australian economy through its exports, whilst showing domestic demand in its imports. Should there be steady increased numbers for both aspects, we could expect some positive movement for the Australian dollar.
Nothing else out this week is expected to create any movement for the AUD. Regarding next week, Thursday is the only day that is expected to show any volatility next week as employment and unemployment figures come out. August’s unemployment figure was 6.8% and September is forecast for an improved 6.3% as it has undulated between the 6-7% readings for the past few months. This is potentially enough to create additional movements for AUD levels coming up but it seems more likely that volatility will come more based off of COVID-19 as most countries globally are far more afflicted than Australia.
Ge in touch using the form below to discuss these factors in more detail and the options available to help mitigate the impact of the quickly changing currency markets.