The Australian dollar rises to a 5-month high into year-end adding more gains in a low volatility year. At the interbank market, the AUD/USD exchange rate settled at 0.6993 at the end of Monday’s close, registering a 0.19% increase in value. The Aussie was seen trading between a tight trading range of 0.6978 and 0.7004 and before the New York open was seen back above the big psychological number 0.7000.
In other news, China saw its manufacturing activity expanding by 50.2 compared to 50.1 the market forecast. China’s National Bureau of Statistics revealed the sector of automobiles, food and beverage and medicine saw the strongest growth in the manufacturing activity. Any reading above the 50 mark indicates expansion and China’s PMI expanded for the second straight month.
The year-end rally has brought the year-to-date performance of the Aussie down to only -0.58%.
The Australian dollar outlook for the year ahead remains gloomy as the RBA is expected to cut interest rates by mid-2020. In 2020 the AUD also remains vulnerable to developments from China and the hopes of easing trade tensions should boost the bids for higher yielding currencies.
Elsewhere, the precious metal Gold is finishing the year on a strong note delivering its strongest performance since 2010. The safe haven bids have been motivated this year by the trade war between the world’s two biggest economies, Brexit fears, the global slowdown and easing efforts amongst most major central banks.
XAU was up 0.48% to 1,525 during the London trading hours on Tuesday.
The dollar index, which gauges the greenback’s strength against a basket of major currencies, continues to be on defensive trading lower. The DXY was seen quoted at 96.57 during the London trading hours.
The domestic benchmark equity index, S&P/ASX 200 index settled on Tuesday at 6684.10 registering a loss of -1.77%. Year-to-date the Australian stock market has gained double digit returns of 18.38%.
Elsewhere, the Australian 10-year government bond yield closed unchanged at 1.374 on Tuesday.