The Australian dollar was up against sterling and other major competitors on further good economic news. Consumer confidence for the Australian economy continues to surge. Despite uncertainty elsewhere, the AUD looks to be fighting fit for 2021.
The Recovery Continues
The big economic release of the day came with the Westpac consumer confidence survey. It continued the positive theme showing a rise to 112 from 107.7. That’s a fourth consecutive increase and a 10-year high.
With states relaxing restrictions and opening their borders, confidence is coming back. The index showed a 4.1% gain in October. It now stands at 48% higher than the April trough. Westpac’s analysts sounded every bit as confident as the data they had just released.
“After only eight months the evidence seems clear that sentiment has fully recovered from the COVID recession,” said Westpac Chief Economist Bill Evans.
Australia is one of the few countries to emerge with credit during the pandemic. Swift and decisive restrictions helped to contain the virus and monetary stimulus has helped to blunt the impact on the economy.
The data follows other good news for the economy. Better than expected growth of 3.3% in the third quarter fuelled expectations for a swift recovery and a good 2021. While Europe and America grappled with second and third spikes, Australia’s restrictions appear to have done the trick.
Australia’s feel good economy outweighed downbeat news from China where its inflation dropped from 0.5 to -0.5%, below the 0% which had been forecast. However, risk barometers stay on the positive side thanks to hopes for a US stimulus and COVID-19 vaccine.
The pound’s Brexit flutterings overshadow everything for EURGBP pair. The only bright side is that soon things will be over, one way or another. The situation is as ever: a mixture of hope and pessimism. News that Boris Johnson will meet Commission president Ursula Von der Leyen boosts the optimists. News that Michel Barnier thinks the chances of a deal are ‘very slim’ does the opposite.
UK officials have also been downplaying the chances of a deal insisting they will not ‘compromise on sovereignty’. Neither side wants to be seen to be backing away from negotiations, but neither side wants to give ground. At the eleventh hour the two sides seem to be as far away as ever.
The dollar hit a high of 0.557 around the middle of Tuesday before slipping back. News that Johnson would meet Von der Leyen in Brussels raised hopes of a deal. However, as optimism waned overnight, it bounced up to 0.5564 at the time of writing.
The Dollar and Euro
AUD did well against USD. It rose from a low of 0.7400 to a high of 0.7451 at the time of writing. Rising economic sentiment continues to weigh on the dollar as analysts look to the Federal Reserve Bank’s decision on stimulus.
AUDEUR also climbed steadily throughout the day. As markets opened in Europe it had reached 0.6138. The Eurozone continues to battle with mixed signs on Brexit and the economy. The European Central Bank is also expected to approve a fresh stimulus when it meets on Thursday.
It was, then, another good day for the Australian dollar which confirmed the faith of the bulls. Its economic data is robust enough to withstand negative drags elsewhere.
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