By guest contributor Stuart Talman, Director of Australian Sales, XE.com
The Aussie dollar finished last week at its highest level since late February, sitting just below key resistance at 0.7200 – a level that has proven to be an impenetrable wall over the past few months.
Finishing the week just over 1% higher, price action whipsawed through the second half of the week, ultimately influenced by an improvement in risk appetite. Investors have found comfort in buying equities through 2019 and with US equity markets ending the week on a strong footing, the Aussie dollar was also in favour.
And whilst there has been much focus on the possibility of a US recession, ongoing trade tensions (US + EU tensions escalating this past week) and still uncertainty over both a US x China trade deal and BREXIT progress, equity markets push higher and the Aussie dollar remains above 70 US cents.
Global markets have gained comfort from the fact that the Federal Reserve will refrain from raising rates further – a key development that leads to a halt to the deteriorating outlook that gripped markets at the start of the year.
Meanwhile locally, despite investors expectations for one or two rate cuts this year, the RBA remains steadfastly neutral.
In a speech on Wednesday, deputy RBA governor Debelle commented that the central bank awaits further confirmation that financial conditions warrant a shift to ease rates.