The British pound is higher against the Australian dollar on Tuesday.
- Australia doubles down on coronavirus origin investigation
- North Korea blows up inter-Korean liaison office
- Beijing enters ‘phase 2’ lockdown
- Pound-Aussie exchange rate is just -0.08% this week
GBP/AUD was up by 56 pips (+0.32%) to 1.8268 as of 4pm GMT.
The currency pair had a low of the day at 1.815 and a high of the day near 1.835 but eventually settled 50 pips above yesterday’s close. Yesterday the exchange rate fell -0.30%.
GBP: Powell testifies to Senate Banking Committee
The pound rose alongside broader markets after the Federal Reserve announced it would start buying individual corporate bonds. Although there were some fluctuations, the overall trend was positive.
The focus among FX traders looking for the next cue on risk sentiment was the testimony from Fed Chair Powell to the Senate Banking Committee as part of his semi-annual Humphrey Hawkins session with lawmakers. When the economy is in trouble, politicians will often use the central bank as a punch bag to distract from their own inadequate policies.
Powell slightly upset the apple cart in today’s testimony though when he said “if market function continues to improve, we will taper corporate bond program.” Adding, “I don’t see us wanting to run through the corporate bond market like an elephant.”
AUD: Relationship with China under strain
Resurgence in virus cases in China’s capital city Beijing, coupled with souring relations between China and Australia were a curse for the Aussie dollar on Tuesday. Australian foreign minister Marise Payne claimed there is a strong mandate for probe into origins of the coronavirus during parliament on Tuesday.
New Coronavirus clusters in Beijing have resulted in a toughening of lockdown measures. Officials have advised people not to leave the city unless necessary and people leaving the capital should have nucleic testing results. So far China will not ask companies or factories to stop work but will encourage work from home. All schools are closing.
Added to Asian geopolitical risk was news that North Korea has blown up the inter-Korean liaison office in Kaesong.
