By guest contributor Stuart Talman, Director of Australian Sales, XE.com
The Australian dollar was under pressure for much of last week as trade relations continued to sour between the US and China and the RBA clearly adopted an explicit easing bias – RBA governor Lowe flagging likely rate cuts ahead.
Price action suggested that the Aussie dollar would continue its march lower as the US dollar hit fresh multi-month highs versus the euro, sterling Aussie and Kiwi dollars. Surprisingly the greenback ended the week lower against most major currencies as a reversal during the latter stages of the week left market participants wondering if the recent USD rally had run its course.
Against a sea of red in equity markets and commodity prices under pressure – two dynamics that would typically weigh on the local currency, the Aussie dollar eeked out a meaningful recovery through Thursday and Friday, rallying over 1.00% of the week’s lows to ends the week back above 69 US cents.
So what caused the USD reversal?