- Australian Dollar Strength
- New Zealand Dollar recovery
- Economic Data Watch list
AUD/USD and NZD/USD rallied to five months highs, as traders reacted to economic recovery post-COVID-19. Australia and New Zealand have bounced back nicely from the COVID-19 carnage, raising hopes that economic activity will bounce back to pre-coronavirus levels.
Australian Dollar Rally
The Aussie dollar touched the 70.04 U.S cents level again in the Monday trading session after retreating lower late Friday. The AUD is up by more than 20% after sliding to an 18-year-low in March, after the COVID-19 pandemic brought the economy to a standstill.
The AUD/USD pair could rise to the 0.7500 level, supported by a wave of positive news in the market. Monetary and fiscal policies by the Bank of Australia and the government have helped support the economy by conversely strengthening AUD in the forex market.
Improving risk sentiment and a record trade surplus has also gone a long way in strengthening the AUD sentiments against the dollar. With the easing of lockdown restrictions, improving growth prospects should see the currency continue to rise from a position of undervaluation against the dollar.
NZ Dollar Bounce Back
The New Zealand Dollar also looks set to continue strengthening against the U.S dollar as coronavirus fears cool off. The country has bounced back to normalcy with the easing of lockdown restrictions that had crippled economic activity.
The NZD/USD is up by more than 20%, benefiting from improving NZD sentiments, following the economy’s opening. Traders also continue to react to a wave of fiscal and monetary policies that have gone a long way in supporting the economy.
A weakening dollar as risk sentiments in the market drops, coupled with a low-interest-rate environment, should strengthen the NZ dollar. Likewise, the NZD/USD should continue to edge higher.
Looking at the week ahead, traders await the ANZ Business Confidence report that should shed more light on the New Zealand economy. The NAB Business Confidence report will also influence the AUD/USD direction of trade.