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Weekly roundup: Dire Australian growth data weighs on AUD

currency-newsWeekly roundup: Dire Australian growth data weighs on AUD
After surging last week on the Federal Reserve’s change in inflation policy, the Australian dollar has seen a reversal of fortunes this week. Dire Australian growth data has heavily weighed on the ‘Aussie’ outlook.

For much of the past week, the Australian dollar has been continuing to advance resiliently, despite major domestic coronavirus concerns and lockdowns in recent months.

The Australian dollar surged as the US dollar slumped. Investors sold the US dollar en masse in reaction to news that the Federal Reserve was shifting its monetary policy focus toward restoring employment and allowing inflation to run higher.

Federal Reserve chair Jerome Powell indicated in his speech that US monetary policy would remain ultra-loose for longer than previously thought. This bolstered the Australian dollar’s appeal, especially as the Reserve Bank of Australia (RBA) has been comparatively optimistic.

However, this week’s Australian GDP growth report shocked investors. Australia’s Q2 economic contraction revealed an even deeper-than-expected recession, Australia’s first recession in decades.

Amid Australian growth concerns, investors will be looking for signs of resilience in upcoming data. Markets will get a better idea of how Australia’s economy is performing from CommBank’s final August PMIs due on Thursday.

Thursday’s Australian trade report and Friday’s retail sales stats from July will also indicate how well Australia’s economy has been weathering the pandemic.

Looking ahead to next week, stronger than expected confidence data from NAB and Westpac could make traders more optimistic and boost the ‘Aussie’ as well.
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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