- Australian Dollar (AUD) rallies on reopening optimism
- Investors await Trump’s response on China
- US Dollar (USD) remains on back foot after personal spending -13.6%
- At 14:00 UTC, AUD/USD +0.5% at US$0.6661
The Australian Dollar is gaining ground versus its US counterpart for a second straight session on Friday. The Aussie Dollar US Dollar exchange rate settled on Thursday +0.24% at US$0.6637.
At 14:00 UTC, AUD/USD is trading +0.5% at US$0.6661. This is towards the upper end of the daily traded range of US$0.6613 – US$0.6683, as the Australian Dollar continues its impressive climb.
The pair is on track for a 2.3% rally across May, adding to a 6.1% surge in April. It now trades back at the same level as it was in early March prior to the coronavirus crisis spreading.
The risk sensitive Australian Dollar is posting gains as it brushes of concerns over rising US – Sino tensions. Tensions have been steadily rising between the two powers across the week as they clash over China’ controversial national security law in Hong Kong.
Later today President Trump is due to give a speech on China. He is expected to give his response to China’s actions. The stance he adopts and the course of action that he decides on could direct risk sentiment heading into the weekend.
Instead the Australian Dollar has driven higher, boosted by optimism surrounding the global easing of lockdown measures and reopening of economies.
There is no Australian economic data due for release today. Investors will look ahead to Australian and Chinese manufacturing PMI figures due for release on Monday morning local time for further clues over the recovery.
The US Dollar is trending lower following worse than forecast consumer spending figures. Consumer spending, which accounts for around two thirds of the world’s largest economy, tanked by the most on record in April. The data revealed that the coronavirus lockdown saw demand for all but non-essential goods evaporate, with purchases halting.
Household spending fell by a worse than forecast -13.6% compared to March, compared to the -12.8% decline that analysts had been forecasting.
On a more positive note, income rose a record 10.5%, well ahead of -5.9% drop expected. However, this was on the back of federal economic recovery payments which have distorted the numbers.
In addition to Trump’s speech, Federal Reserve Jerome Powell is also speaking. However, given his numerous appearances in recent weeks he is not expected to add anything new.