Australian Dollar Strongest on Economic Data, Market Sentiment

The Australian dollar rallied today, turning out to be the strongest currency on the Forex market during Wednesday’s trading. The possible reasons for the rally were good domestic macroeconomic data and optimism about an exit from the lockdown in Australia as well as other countries around the world.
The Australian Bureau of Statistics reported that the Wage Price Index rose 0.5% in the March quarter from the previous three months. The rate of increase was stable, unchanged from the reading registered in the December quarter, and matched market expectations.
The Westpac-Melbourne Institute Index of Consumer Sentiment jumped 16.4% in May, demonstrating the biggest jump in the history of the survey, following the record plunge of 17.7% in April. The report commented on the result:

The survey spanned the period 4–8 May, which covered the lead up to and actual announcement of the Commonwealth Government’s Three Stage Plan to ease restrictions.

This represents an impressive recovery in Confidence. Consumers are clearly heartened by Australia’s success in containing the Coronavirus which has justified the easing of some of the social restrictions that have been so painful for individuals and the economy over the last two months.

Indeed, investors were becoming more hopeful as more and more countries around the world outline their plans to exit the lockdown and restart their economic activity. That reflected in gains of commodities today. Copper, as well as precious metals with the exception of palladium, was rising today. Crude oil performed unusually, with the WTI and Brent grades moving in opposite directions. The Australian dollar is considered a commodity currency, therefore its performance is often tided to moves of prices for raw materials.
Now, traders wait for tomorrow’s release of the rather important employment report, which should show how the Australian labor market fared in the midst of the coronavirus pandemic. Analysts predicted ahead of the report that it will show a huge slump of employment by 575,000 and the jump of the unemployment rate from 5.2% to 8.3%.
AUD/USD rose from 0.6469 to 0.6511 as of 12:51 GMT today. EUR/AUD fell from 1.6758 to 1.6700. AUD/NZD soared from 1.0643 to 1.0771, trading near the highest level since November 13.
If you have any questions, comments, or opinions regarding the Australian Dollar, feel free to post them using the commentary form below.

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