The Australian Dollar seen both it's biggest one day gain and then one day loss against the USD in years after moves by both Reserve Banks seen the RBA raise rates last week, followed by the US Federal Reserve raise rates leaving the AUD sitting at a very low 0.7070 at the close of the week.
The Aussie moved up and back over 2% in two days, reaching at high as 07252 before crashing back down to the 0.70s after the US moved rates 50 basis points and followed through on their talks to do so in recent weeks.
Chinese PMI data revealed that the activity in the private sector continued to decline in April. Additionally, Beijing announced a ban on all restaurants and ordered residents to provide proof of a negative COVID test to enter public venues, further weighing on sentiment.
The knock on effect of China's tough stance on the latest outbreak of COVID is seeing all sorts of problems with the supply chain line as the shutdowns in Shanghai created a huge backlog problem and recent Data from Project44, which tracks global supply chains, showed that shipment delays between China and major US and European ports have quadrupled since late March, when China shut down the city of Shanghai, which has the world's busiest container port.
The main issue has been caused with local truck drivers unable to reach factories to move stock, and then having many locals locked at home in quarantine this has provided so many knock on factors and things are struggling to get moving again.
All of these issues are providing concerns around the local economy and putting addition stress on local businesses who are dealing internationally. The downside to all of this is a weak AUD again at the moment. The current trend could see us back testing the 0.7000c mark as we have in December and January, so let's hope for the importers that it recovers like it did on both of those occasions.
A big week ahead for data releases out of both China & the US. I would expect to see plenty of movement in the AUD/USD this week off the back of this.
We have a couple of clients that were able to book in some contracts at 0.74-0.75c back in April so this is giving them less concern for now as they have covered themselves for the next 6-12 months worth of purchases. As always feel free to touch base around the option of risk management.
