AUD to USD
The AUD/USD seems to have found a consolidation point at the moment between 0.7320-0.7390 over the past 12 days, and is looking for some news to help it bounce away from here.
Yesterday seen the Reserve Bank of Australia (RBA) leave interest rates unchanged at 0.10% which was expected as the RBA announced its policy decision. Despite concerns about the economic impact of rising coronavirus cases, the RBA stuck with its plan to taper its bond-buying programme which provided short lift in the AUD which gained approx 0.5% on Tuesday to close the day at 0.7394.
After the fall in June which was propelled by the US speaking about their own interest rate rises, we have seen lockdowns in both of Australia's largest areas in Sydney and Melbourne and this has continued to have a negative impact on the AUD in recent weeks.
Economists at European Investment Bank Société Générale commented that the statement cites better than expected GDP growth/labour market recovery, however "relief for AUD is likely to be short-lived until jitters in Chinese equity markets settle down. Tactically, we think AUD/USD remains a sell on rally unless the pair can overcome 0.7450”“The RBA surprisingly decided to stand by its plan to taper AGB purchases starting early September. The bank will keep the programme under review in light of economic conditions and the health situation. In the statement, it acknowledged the strong economic recovery and expects growth will bounce back quickly from a possible contraction in 3Q once the latest virus outbreaks are contained.”
The end to the week will be key with a big day of employment data from the US on Friday, and before that the RBA Governor Lowe speaks before the House of Representatives Standing Committee on Economics, in Canberra.
The GBP has been one of the strongest movers in the past month. Lifting to 14 month highs against the AUD, touching $1.8950 for a day before some sell off followed.
The pound has traded better against both the AUD & USD since England's so-called 'Freedom day' when most lockdown measures in England were dropped on July 19, feelings that the pandemic could be largely over by the Autumn, allowing the economy to strongly rebound in the second half of the year, coupled with a potentially hawkish Bank of England is going to be a support for the currency going forward.
The GBP/USD has traded back towards $1.40 this week, a point it has only briefly passed a couple of times since 2018. With the Bank of England meeting on Thursday and US Employment data on Friday, this could be a very key week for both currencies.
Key levels at $1.4250 which has been the recent resistance levels will give a good indication as to the real strength of the GBP against the greenback.