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The Aussie takes second place on the week as risk-on sentiment dominates price action, with a little bit of help from net positive Aussie economic data.

Overlay of AUD Pairs & Gold (Black Line): 1-Hour Forex Chart
Overlay of AUD Pairs & Gold (Black Line): 1-Hour Forex Chart

Australia Headlines and Economic data

Major Market Drivers for the Australian Dollar

Global risk sentiment was likely the contributing factor to the Aussie’s relative performance this week, and for a broad rundown of what drove global risk sentiment, check out my review of this week’s risk sentiment drivers and broad market behavior in my Japanese yen weekly review here.

In short, we saw risk-on sentiment to start the week and dominated almost all the way through Friday as traders seemed to focus on the improving geopolitical risks related to the U.S.-China trade negotiations and the avoidance of another U.S. government shutdown with a new border security bill.  Minus a broad turn towards risk-off after a very weak U.S. retail sales report during the Thursday U.S. trading session, traders were favoring the Aussie all week over the rest of the majors, with greater out performance against the safe havens versus its gains against the Loonie and the Greenback. The Kiwi was an exception this week, finding strength after the Reserve Bank of New Zealand surprises traders with a less-dovish-than-expected monetary policy statement during the Wednesday morning Asia session.

From Australia, it was another relatively quiet calendar but the data was net positive and arguably related to uniformly bullish Aussie moves. First, we got extremely weak home loans data (-6.1% in December) and NAB business conditions data (rising 4 index points to 7) on Tuesday. Aussie pairs uniformly rallied over the next few hours suggesting that traders may have focused on the lessening risk of a slowdown in the business sector.

We also saw uniform rallies in Aussie pairs after the big jump from negative to positive in the Westpac consumer sentiment data on Wednesday and the tick higher in the Melbourne Institute’s inflation expectations on Thursday, but it’s also likely that the broad risk-on sentiment and/or the positive Chinese trade data played a factor in the moves as well.   Altogether, it was a positive week for the the Aussie against the majors, only losing out to the hugely bullish Kiwi to take its second place spot for the week!