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Monthly Wrap: AUD - Australian Dollar Buoyed by Risk Appetite, Dovish RBA Caps Gains

currency-newsMonthly Wrap: AUD - Australian Dollar Buoyed by Risk Appetite, Dovish RBA Caps Gains
Key takeaways:
 
  • Australian Dollar under pressure from dovish RBA and turmoil in China
  • Better-than-expected business confidence and lockdown easing support AUD
  • AUD Monthly lows: £0.53, $0.72, €0.62, NZ$1.03, C$0.91
  • AUD Monthly highs: £0.54, $0.75, €0.64, NZ$1.06, C$0.93
The Australian Dollar (AUD) climbed against the majority of its peers over the course of the past month, as global risk appetite improved and lockdowns were lifted across parts of Australia after almost four months.

Towards the end of September, AUD found support on impressive manufacturing data, as the country’s PMI Flash revealed a sixteenth consecutive month of expansion.

Upbeat comments from Tourism Minister Dan Tehan indicated that Australia would open international borders in time for Christmas, boosting the ‘Aussie’, although some dovish commentary from the Reserve Bank of Australia (RBA) capped gains.

Into October, the Australian Dollar was subdued by turmoil in China. Power cuts in China’s north-eastern industrial hubs belied energy shortages, while the financial decline of property developer ‘Evergrande’ signalled the beginning of a real-estate crisis.

Military tensions between Taiwan and China also exerted downside on the ‘Aussie’, alongside domestic Covid cases and an international risk-off mood. Substantial losses were avoided, however, as AUD found support on rising commodity prices and vaccine optimism.

Mid-October, the Australian Dollar climbed further on lockdown easing, as restrictions in New South Wales were eased after almost four months of lockdown. Better-than-expected Australian business confidence also bolstered AUD.

Weak consumer confidence applied some downside pressure to the ‘Aussie’ alongside consistently dovish messaging from the RBA. Headwinds were capped, however, by rising commodity prices and an upbeat jobs report, which saw 26,7000 more people employed full time in September than in August.

Looking ahead, the RBA’s interest rate decision in early November will likely influence AUD trading, followed by September’s balance of trade and employment data later in the month. Chinese data may also have an effect on the Australian Dollar, with China publishing its inflation rate shortly after Australia.
 
Philip McHugh

Philip McHugh

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)

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