The Australian dollar joined the rally of its New Zealand counterpart amid the risk-on market sentiment. There were no macroeconomic reports released in Australia today, while yesterday’s data was positive.
Yesterday, a report from Markit showed that both manufacturing and services sectors accelerated their growth. The Flash Manufacturing Purchasing Managers’ Index climbed from 54.2 in October to 56.1 in November. The Flash Services PMI rose from 53.7 to 54.9. Bernard Aw, Principal Economist at IHS Markit, commented on the results:
Latest PMI data showed the recovery in the Australian private sector economy gained pace during November, setting the scene for a stronger GDP performance during the final quarter of 2020. A further easing of virus containment measures particularly benefited the services sector, which saw business activity growth accelerate in November. Manufacturing output also rose at a faster pace.
Today, Guy Debelle, Deputy Governor at the Reserve Bank of Australia, delivered a speech about monetary policy in 2020. He explained how interest rates affected the exchange rate:
The decline in interest rates across the yield curve has lowered the exchange rate, relative to what it otherwise would be.
The Governor mentioned the positive news about the coronavirus vaccine development but also said that it will take time before the vaccine could be shipped across the world:
While the news about vaccines should help bolster that confidence, the recovery will be uneven. It is likely to be some time before the vaccines will be widely available and distributed.
In the end, he talked about the positive impact stimulus had on the economy:
That said, the fiscal and monetary support will boost spending in the economy. This will increase employment and, in time, reduce unemployment. A materially lower unemployment rate is clearly desirable in itself, but will also be necessary before we will see sustainably higher wages growth and inflation.
AUD/USD jumped from 0.7285 to 0.7358 as of 9:19 GMT today. EUR/AUD tumbled from 1.6249 to 1.6140. AUD/JPY advanced from 76.11 to 76.71.
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