OANDA FX VIEW: Aussie dollar remains resilient

“The Aussie dollar is sort of in a sweet spot at the moment, getting buoyed by global risk appetite and its close correlation to commodity prices,” said Stephen Innes, senior currency trader at FX and CFD firm OANDA Australia and Asia Pacific.

According to Innes, “Hard commodity prices continue to trade in the Goldilocks zone. Neither bullish nor bearish,”

“And local miners continue to enjoy the Brexit driven gold price resurgence. All these are lending support to the Aussie at the moment.”

Innes added, “But most significantly, Aussie bulls are basking in the fact global central bankers are committed to making the global capital markets a happy place by flooding the financial system with money.”

He also pointed out that the political vacuum noise in Australia has diminished significantly over the past 48 hours.

“The political landscape is looking slightly more stable with the Liberals now set to return to government,”

“But we are seeing slightly subdued reaction to this (Liberals to form government) and very minor moves on the Aussie dollar this morning,” Innes said.

From a budgetary perspective, Innes said this will ease concerns of across the political floor squabbling, extend debate and delays when it comes time to table a very unpleasant budget to address both the deficit and credit rating agency concerns.

The next hurdle and high impact event this week will be the Domestic Unemployment Rate released on Thursday, with current forecasts looking for a slight increase in the Unemployment Rate to 5.8% from 5.7% prior.

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For more information, visit: https://www.oanda.com/resources/legal/australia/