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Currency Update, June 20th, 2022.

A very volatile week saw the AUD/USD exchange rate move back and forth from 0.7035 at the open on Monday to 0.6936 when the markets closed on Friday night.

Three of five days last week saw the exchange rate swing over 1% and almost 2% on two occasions, which saw the rate test the previous low from May at 0.6853 before recovering back above 0.70 just to give away all those gains on Friday evening.

With the US Federal Reserve raising interest rates 0.75% on Thursday which was more than the expected 0.5% the USD​ has seen a very strong response after this and this has the US Dollar Index sitting at its highest point in 20 years.

Both the Bank of England and the Swiss National Bank raised interest rates late last week – following a move from the US Federal Reserve. This leaves the Bank of Japan the only global player to maintain near-zero interest rates.

​Australian ​Reserve Bank governor Philip Lowe will speak about the economic outlook and monetary policy at an AmCham event on Tuesday, shortly before the central bank releases the minutes of its June board meeting, where it raised rates 50 basis points.

​The constant theme which is continuing is seeing markets move quite sharply when it comes to inflation figures and fears, along with central bank policies and movements. ​The minutes being released will come under scrutiny and talks of more potential moves could see the AUD rebound a little this week if the market digests the news well.

This week with also see a speech by the Federal Reserve later in the week, Inflation from the UK which is expected to follow other countries leads and be extremely high, with estimates having it noted at 9% which will no doubt create much more volatility in the week ahead.

As always, please feel free to reach out and look at managing risk in these uncertain periods.

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