The Australian dollar is up against the US dollar on Friday after a week of central bank and government stimulus efforts helped ease a little of the concern about the global growth outlook and the corresponding demand for commodity exports including oil which has gained nearly one third in two days.
AUD/USD was higher by 89 pips (+1.53%) to 0.5828 with a daily range of 0.5665 to 0.5986 as of 5pm GMT.
AUD/USD made more progress from its 17-year low made this week, trading up above 0.595 but not quite reclaiming the 0.60 handle. Losses for the week currently stand at -5.76%.
Australian dollar held by RBA QE program
The Aussie has been a beneficiary of an improvement in risk sentiment on Friday, rising against the dollar from lows reached on Thursday that were the weakest since 2003.
Australia is still likely headed for a recession in the second quarter but so its most of Europe because of the increasingly strict containment measures being taken against the spread of the coronavirus. While the effects on Australia mainly came from Asia tourism and global commodity demand, the United States and Europe are seeing whole sectors of the economy have to shutdown.
Rising equity markets responding to the ever expanding levels of monetary and fiscal stimulus across the globe to fight the coronavirus pandemic should mean a stronger Aussie. The RBA bought $5 billion AUD of government bonds this week.
US dollar weakened by Fed swap lines and profit taking
After a massive surge that took the dollar index to 3-year highs and AUDUSD to 17-year lows, the dollar came in for profit-taking at the end of the week.
The dollar funding shortage was lessening by the weekend thanks in large part to the Federal Reserve easing the stress by providing its own dollars in more swap lines with the other big central banks which can in turn add the dollars into their own financial systems as needed by domestic banks. In addition, the Fed expanded its money market facility to municipal debt issued by US states, municipalities or counties.