Skip to Content
News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

Free Trading Guides
Subscribe
Please try again
Select

Live Webinar Events

0

Economic Calendar Events

0

Notify me about

Live Webinar Events
Economic Calendar Events

H

High

M

Medium

L

Low
More View More
Australian Dollar Outlook: AUD/USD Back on the Offensive as Covid Restrictions Ease

Australian Dollar Outlook: AUD/USD Back on the Offensive as Covid Restrictions Ease

Daniel Dubrovsky, Contributing Senior Strategist

Share:

What's on this page
AUD/USD Chart

Australian Dollar Fundamental Forecast: Bullish

  • Australian Dollar seemingly finding a turning point for now
  • Lockdowns easing in Sydney, Melbourne may drive sentiment
  • AUD may be more sensitive to equities, commodities than before
AUD Forecast
AUD Forecast
Recommended by Daniel Dubrovsky
Get Your Free AUD Forecast
Get My Guide

The Australian Dollar is seemingly back on the offensive, but it remains much lower against the US Dollar since February. Still, gains in the Aussie have meant that weakness since earlier in 2021 has slowed. This is despite another disappointing Australian labor market report. Following an unexpected -138k loss in jobs during September, Australian employment levels are back below pre-pandemic points.

Might the Australian Dollar be stabilizing? It is possible. To explain this, have a look at the chart below. The commodity-linked currency was unable to capitalize on rosy market sentiment earlier this year as metals - such as copper and iron ore - rose. During that time, there was a meaningful pullback in Australian government bond yields, reducing the appeal of the local currency.

Moreover, the nation entered lockdowns to help tame the Delta Covid-19 variant. That negatively impacted economic growth expectations, now being felt in the labor market. But, markets are forward looking. Australia is now gradually unwinding lockdowns. Covid restrictions were relaxed in Sydney this past week, and Melbourne is up next to start the week.

With Australia now seemingly moving forward with reopening, we could begin to see upward revisions to growth expectations. Still, the situation remains fluid. As parts of the nation open up, Covid cases are on the rise. A reintroduction of lockdowns risks derailing optimism, which is something the sentiment-sensitive currency could be left vulnerable to.

In the week ahead, the economic docket is fairly light. RBA meeting minutes are on tap. The week also starts off with third-quarter Chinese GDP data. China is Australia’s largest trading, softer growth risks negatively reverberating into the local economy. Still, China is gradually buying Australian coal again to combat power shortages. India is also capitalizing on Australian coal idling at Chinese ports.

How to Trade AUD/USD
How to Trade AUD/USD
Recommended by Daniel Dubrovsky
How to Trade AUD/USD
Get My Guide

Australian Dollar Vs. MSCI World Index, BBG Commodity Index Futures and AU Bond Yields

Chart Created Using TradingView

*Majors-based AUD index averages AUD against USD, EUR, GBP and JPY

--- Written by Daniel Dubrovsky, Strategist for DailyFX.com

To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter

Trade Smarter - Sign up for the DailyFX Newsletter

Receive timely and compelling market commentary from the DailyFX team

Subscribe to Newsletter

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES