The AUD tumbled last week as risk sentiment wilted and investors fled back to the safe haven USD and JPY. Market volatility is likely to continue this week with the FOMC meeting, and although the Fed is expected to keep monetary policy unchanged, the markets will pay close attention to for clues about the future of the QE program. The minutes of the RBA’s recent meeting are also released this week, we are not expecting a huge amount of movement here as the market has already priced in the lengthening of QE until Q2 2022.
AUD to NZD
The Aussie Dollar fell to the lowest level against the Kiwi since April 2020, traders have been shorting the Aussie due to the central bank divergence as the Reserve Bank of New Zealand gear up for its first rate hike since 2014 while the RBA continue to suggest rates will not rise until 2024. With Australia a possible 4-8 weeks away from the touted 70-80% fully vaccinated rate, it is likely we’ll see a strong economic rebound which will bring the AUD with it.
AUD to USD
The AUD fell to a three-week low against the US Dollar last week as lacklustre job figures failed to support the sentiment sapped Aussie. Although the official benchmark unemployment rate went down, almost 150,000 jobs were lost in Australia, the largest loss since May 2020. Difficulties in the Chinese economy and a falling iron ore price have exacerbated the move down and the possibility of the Federal Reserve taper announcement on Wednesday is likely to put the AUD under more pressure this week.
AUD to GBP
Like everything else, the AUD fell against the Great British Pound last week. Despite Brexit driven supply and labour concerns, the GBP was supported by a raft of positive economic data. UK Inflation beat expectations, by quite a margin, which will put the spotlight onto the Bank of England policy meeting on Thursday. It’s expected that interest rates will remain at the record low of 0.1% but any message that reaffirms the market’s expectation for an early 2022 rise will underpin GBP.
*Market update provided by our Travel Money Transfers partner SendFX Pty Ltd ACN 617 647 220 (‘Send’). Send holds an Australian Financial Services Licence (No. 509635) . 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.
