The pound fell sharply yesterday after the UK inflation rate jumped from 7% to 9% – its highest level since 1982.
While still fairly appealing against some weaker major currencies like the euro, the Australian dollar fell against rivals like the pound and US dollar last week.
Australia’s coronavirus outlook remains fairly optimistic, with the nation currently enjoying a period of no new infections while vaccines continue to roll out.
However, the Reserve Bank of Australia’s (RBA) pledge to keep monetary policy loose for years continues to weigh on markets and AUD appeal. Speculation of more dovish policy is also likely unless the bank takes a more optimistic stance.
The Australian dollar has also been dented by a resurgence in demand for the US dollar over the past week. US fiscal stimulus and strong US data both contributed to the US dollar bounce, which has in turn been weighing on the ‘Aussie’.
There is more opportunity for AUD to strengthen again in the coming week or so, however, with major data and RBA news on the way.
If RBA Governor Philip Lowe is optimistic in speeches expected over the next week, AUD could make gains.
Next week’s RBA meeting minutes report and Australian job market data also has the potential to be highly influential for the Australian dollar.
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)