The AUD/USD currency pair is off to a great start this week as the bullish momentum that prevailed for the better part of Monday spills over to Tuesday’s trading session.
The bulls have been pushing up the AUD/USD currency pair largely on account of the restored optimism among investors. This is especially after the Australian Central Bank, the Reserve Bank of Australia (RBA) decided to maintain its benchmark rate at 0.25 percent. Another major factor that may have contributed to the sentiments is the fact that the coronavirus infection rates have been slowing down. The coronavirus has been the major force that has affected the markets and sent investors into a panic over the past few weeks.
This week the Aussie dollar has seen significant upside as it gains favor from investors. It is one of the currencies that do not do well when the markets are characterized by higher risk and conversely perform well when investor sentiments are positive. On the other hand, the U.S dollar is usually treated as a haven currency in times of crisis. It thus makes sense that the AUD is gaining against the USD now that the situation is getting better.
The above premise holds up in the case of the AUD/USD’s performance this week. The currency pair kicked off Monday’s trading session at 0.5991 which also happens to be its lowest price point on Monday. It surged to the day’s high at 0.6122 before closing the day slightly below that price point. Tuesday’s trading session started off with a slight bearish performance which saw the price reach the day’s low at 0.6097 before the bulls took over. So far the price has surged to the day’s high at 0.6209.
There has been mounting concern that the coronavirus situation will likely become a catalyst for an economic crash. However, the RBI has been busy trying to make sure that an economic crash will not happen. Improving investor sentiments highlight the fact that investors are waiting for things to get back to normal so that regular investment and business operations can resume.