The Australian dollar takes the top spot this week thanks to rising global risk-on sentiment, and positive economic updates from the Land Down Under.
Overlay of AUD Pairs & Gold (Black Line): 1-Hour Forex Chart
Australia Headlines and Economic data
- Australian Performance of Manufacturing Index fell 3.0 points to 51.0 points in March 2019 (seasonally adjusted)
- NAB business conditions in Australia bounce but confidence lower
- Australia’s central bank sets measured tone on rates before budget
- Australia building approval figures give mixed signals amid rebound in apartments
- Australian retail sales soar
- Australia’s trade surplus surged to AUD 4.80B in Feb. 2019 from a downwardly revised of AUD 4.35B in Jan.
- Australian Performance of Services Index rose by 0.3 points to 44.8 points in March 2019 (seasonally adjusted)
Major Market Drivers for the Australian Dollar
Good start to the week for Aussie bulls after surprise positive news from its largest trading partner, China, as China’s factory activity unexpectedly grows in March. This not only likely helped lift Aussie pairs on Monday, but likely also pushed up global risk-on sentiment, as evidenced by the fall of gold prices on the one-hour chart overlay above.
But Aussie pairs ran into a momentary speed bump on Tuesday after the RBA monetary policy meeting and statement. They held interest rates at 1.5% while waiting to get more data on the positive impact of public infrastructure spending and private investment, versus the weakness in the housing market and household disposable income.
We also saw a dovish tilt on the outlook on interest rates as the RBA said it will “set monetary policy to support sustainable growth in the economy,” which is different than the March statement where they kept policy unchanged to “be consistent with sustainable growth.”
It was also likely the RBA wanted to wait for the government’s annual budget plan that was to be released later in the day, which eventually showed stimulative actions including a tax relief plan and a A$100B infrastructure package. There was no major reaction to this news, but it was likely more supportive than not for the Aussie as it probably took some rate cut pressure off of the RBA.
The Aussie got back on the bull train not too long after the government budget release thanks to the latest Australian retail sales and trade balance data, on Wednesday. Both came out better-than-expected to contribute to the positive vibes, sparking an noticeable reaction from Aussie traders who sent most Aussie pairs back into the green for the week.
And that’s where they stayed as risk-on sentiment likely took over as the driver for price action, mainly on positive U.S.-China trade story updates, including the news that the U.S. and China are reportedly drawing closer to a final trade agreement, to take the number one spot among the major currencies!
