The US dollar roared higher on Wednesday following some hawkish comments from Federal Reserve Chair Jerome Powell, following the US central bank’s latest interest rate decision.
These concerns prompted the Reserve Bank of Australia (RBA) to cut interest rates to a new record low at the start of the week.
Surprisingly the RBA cut provided a boost to the ‘Aussie’ particularly as it was accompanied by Australian PM Scott Morrison’s comments on possible fiscal stimulus.
But the Australian Dollar was ultimately unable to sustain these gains, weakening in the latter half of the week in response to some weak retail sales figures and coronavirus uncertainty.
Meanwhile, the ‘Kiwi’ found a temporary reprieve last week, rising in response to widespread weakness in the US dollar but unable to consolidate its gains in the face of Covid-19 fears.
Looking to the week ahead, it looks clear that both the Australian and New Zealand Dollars will face considerable volatility this week, having already registered falls of over 2% in early trade in response to collapsing of oil prices.
Also influencing AUD exchange rates this week will be Australia’s business confidence index, which is likely to register a fall on the back of coronavirus fears.
Meanwhile the ‘Kiwi’ could find some limited support if New Zealand’s business PMI indicates the private sector returned to growth last month.
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)