The pound surged over 1% against the euro and US dollar after the Scottish Nationalist Party (SNP) failed to gain an outright majority and the risk of another independence referendum lessened.
- AUD supported by increased risk appetite and strong economic data
- Will the RBA adopt a more hawkish tone ahead of its rate decision?
- AUD Monthly lows: £0.54, €0.63, $0.75, C$0.94, N$1.07
- AUD Monthly highs: £0.56, €0.65, $0.78, C$0.97, N$1.09
Towards the end of March, investors sold the risk and trade-correlated Australian Dollar from recent highs due to a dip in market sentiment after months of strong global optimism.
Concerns about the coronavirus pandemic’s impact on the global economy worsened, amid speculation of more restrictions in key economies such as Germany.
Market sentiment also turned more cautious on rising speculation that the Federal Reserve could be pressured into hiking US interest rates soon.
While Australian data continued to show broad strength and economic resilience, the Australian Dollar struggled to hold its ground as investors moved away from risk-sensitive currencies.
However, market risk sentiment has improved recently as the Federal Reserve maintained its dovish stance in comments from officials, and largely unsurprising US inflation data offset Fed tightening speculation.
Australian data has continued to impress investors as well, with consumer confidence showing impressive signs of improvement and a surge of employment in Australia’s key March job market report unexpectedly lowering the unemployment rate to 5.6% in March.
Looking ahead, market sentiment is only likely to keep improving as more economies show signs of recovery. So long as Australian data remains strong, the Australian Dollar may retain its positive footing.
Key Australian data to keep an eye out for includes Australian retail sales and PMIs due towards the end of next week. Australian inflation data could also drive AUD movement towards the end of April if it causes any speculation of a more hawkish Reserve Bank of Australia (RBA).
RBA developments will remain influential, with the RBA meeting minutes due next week and the bank’s next policy decision set for early May.
Continued strength in Australian economic data and improvements in Australia’s coronavirus recovery outlook could cause speculation of a more hawkish RBA, so this decision could significant movement in AUD exchange rates.
Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure
Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)