AUD News: Australian Dollar Weekly Review - 18 December 2020

The Australian Dollar saw another week of volatile movement, fuelled by fluctuating market sentiment and risk appetite.

While the release of the Reserve Bank of Australia’s (RBA) December meeting minutes put some pressure on the Aussie dollar, this failed to keep the currency on the back foot.

Signs of resilience within the Chinese economy and hopes of a greater rollout of Covid-19 vaccines to come both helped to lift market sentiment and the Australian Dollar.

The AUD/USD exchange rate rose to its highest level since March 2018 as the Federal Reserve maintained its commitment to keeping monetary policy loose for some time to come.

With investors still hopeful of an imminent breakthrough in UK-EU trade talks and the US stimulus package, the appeal of the AUD continued to improve heading into the weekend.

Looking ahead, the Australian Dollar could hold onto its positive footing in next week’s shortened trading session. Could a sustained ‘Santa rally’ drive AUD exchange rates to fresh multi-year highs?

In the final days before the Christmas break only two domestic releases are scheduled, which are:

• Retail Sales (Nov)
• Private Sector Credit (Nov)

Greater Australian Dollar movement looks likely on the back of the retail sales data, with AUD exchange rates vulnerable to any signs of a slowdown in sales growth.

Developments surrounding Brexit and the US fiscal stimulus package are expected to dominate the international market outlook, meanwhile. If the UK and EU ultimately fail to agree a trade deal this could see global investor sentiment weaken. Any revision to the finalised third quarter US gross domestic product report could see the US Dollar falling further out of favour.

*Forecasts provided by TorFX TorFX Pty Ltd. AFS Licence number 246838. The information on this website has been provided for general information purposes only and must not in any way be construed or relied upon as personal advice.