What’s Driving AUD Right Now?

Despite the biggest recession the world has seen in almost a century, certain risk assets have been gaining considerably ground. As a proxy for risk, the Aussie Dollar has joined in the fun and has outperformed its major counterparts on both a 1-month and 3-month basis. The big questions is, can the rally last?
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The Aussie Dollar has seen some head scratching lately as the currency has outperformed most of its peers in the last three months. Interestingly, the rally has coincided with the recent FOMO driven rally in US equities.

But, apart from Equities, there has been other positive catalysts for the Aussie as well. These include massive fiscal stimulus from the government, as well as sky rocketing Iron Ore prices, not to mention Australia’s biggest trading partner (China) showing signs of recovery.

Usually, a recovering China would be good for Australia, but the recent political tensions between the two countries are a big negative factor that has arguably not been reflected in the price yet. If this situation escalates, it could be game over for the Aussie, at least in terms of enjoying more fun in the sun alongside further equity rallies.

This week we also have the RBA policy meeting and Q1 GDP, both events will be important, but arguably not the full weight of the market’s focus this week.

This week ahead video will help you prepare for this week’s upcoming events and provide insights into how you could possibly trade it as well.

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Highlights of the video:

00:41 – Current Baseline

07:18 – Baseline expectations for the upcoming risk event

09:47 – Possible sentiment shifts

12:50 – Possible currency pairs to consider

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