Last week’s high: AU$1.8097
Last week’s low: AU$1.7921
Strong Commodity Prices Keep Australian Dollar Buoyant
Despite some speculation that the UK could remain in an EU customs union following Brexit, the Pound to Australian Dollar exchange rate was unable to sustain gains last week and closed relatively closely to the week’s opening levels.
Sterling has seen limited support due to Britain’s underwhelming economic outlook, as well as uncertainties surrounding the Brexit process.
The latest concerns revolved around the EU customs union. Some reports suggested the UK government planned to keep the UK in a new customs union following Brexit, but the UK government has continued insisting that the UK will be leaving the EU customs union. This uncertainty is limiting Sterling demand.
The Australian Dollar, on the other hand, has remained surprisingly resilient despite the recent broad strength of the US Dollar (USD). This has been due to strong prices of major commodities like iron ore and oil bolstering the appeal of the risky commodity-correlated Australian Dollar.
AUD Outlook: UK Inflation and Trade Developments in Focus
Ever the hot topic, news regarding trade talks between the US and China, will continue to influence risky trade-correlated currencies like the Australian Dollar next week.
Optimistic developments in trade talks will likely make the Australian Dollar more appealing, especially as China is Australia’s biggest trade partner.
However, Australia’s domestic economic calendar is looking a little quieter. As a result, the Pound is more likely to be driving GBP/AUD movement next week.
Major UK ecostats will be published throughout the week, starting off with April inflation figures on Wednesday, followed by retail data on Thursday and growth projections on Friday.
The week’s most influential report will be UK inflation, as the data could have an impact on Bank of England (BoE) interest rate hike bets if it surprises investors.
02:30 Australian Construction Work
09:00 RBA Governor Lowe Speech
09:30 UK Inflation Rate
01:30 Australian Westpac Leading Index
09:30 UK Retail Sales
09:30 UK Growth Rate
09:30 UK Business Investment
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