- Australian Dollar rallies by 17% after reach an 18-year low in March.
- Australia on track to recover over 60% of lost GDP.
- Vaccine and A$400 million stimulus package news expected to support recovery.
The Australian government is reportedly planning to push back the need for monetary easing by rolling out a A$400 million stimulus package. This resulted in a significant boost for the Australian dollar. The AUD/USD currency pair recently enjoyed a strong bullish run courtesy of the Aussie dollar’s impressive gains. The 17% rally in the AUD has happened just two months after the currency pair previously reached 18-year lows.
If the price trades long above the $0.6517, it is expected to contend with strong resistance at around $0.6537, $0.6585, $0.6629, and $0.6702. However, performance short below $0.6477 should show strong support in the $0.6457, $0.6428, $0.6365, and $0.6311 price levels.
The AUD is not out of the woods yet because the China-U.S trade war threatens to undo the Aussie’s recent gains. Australia’s economy is heavily influenced by China’s economic performance, mainly because the two are trade partners. If the trade war affects China, then it will likely hurt the AUD’s performance. The trade standoff may undo most of the gains that were to take place due to the eased coronavirus-related restrictions.
The trade relationship between Australia and China is already taking a hit. Simon Birmingham, the Minister for Trade in Australia on Monday, expressed his disappointment with China’s decision to impose anti-subsidy and anti-dumping duties on barley imported from Australia. China’s decision is a significant dent to Australia, which is one of the main suppliers of barley in the world. The decision could also escalate trade tensions between China and Australia, resulting in further negative impact on the Aussie dollar.