The Australian dollar rose a bit today, gaining against all other most-traded rivals, despite risk aversion prevailing on markets. Domestic macroeconomic data was good but is unlikely to provide the currency substantial support.
Markets were in a risk-off mode in part due to the sell-off of tech stocks. Another reason for worry was the news that drug producer AstraZeneca had to pause COVID-19 vaccine tests after one of the test subjects demonstrated an unexplained illness. The company explained that it is not unusual during large tests to encounter an illness not related to the test itself. Still, the company has to make sure if that was a negative reaction to the vaccine or not.
As for Australian economic data, the Westpac-Melbourne Institute Index of Consumer Sentiment jumped by 18% from 79.5 in August to 93.8 in September. The report commented on the result:
We suspected last monthâs 9.5% collapse in the Index was an over-reaction but this monthâs 18% rebound is a pleasant surprise nonetheless. It comes despite official confirmation in the survey week that Australia had experienced its first recession since 1992. Clearly this was âold newsâ with respondents more focussed on the future.
The report further explained that the previous month’s sharp deterioration of the sentiment was a reaction to the announcement of a “stage 4” lockdown in the Victoria state due to an unexpected surge of coronavirus cases. But the number of new cases dropped dramatically after the lockdown was in place, restoring consumer confidence.
AUD/USD edged up from 0.7213 to 0.7228 as of 9:11 GMT today. EUR/AUD dropped from 1.6323 to 1.6272. AUD/JPY inched up from 76.47 to 76.60, bouncing from the session low of 76.10.
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