Australian Dollar Rallies on RBA and Vaccine Hopes

Australian Dollar (AUD) Buoyed by the RBA and Vaccine Hopes

The Australian Dollar (AUD) made significant gains during Tuesday’s session after the Reserve Bank of Australia (RBA) offered several surprises in its minutes, advocating further fiscal stimulus.

A speech from Governor Philip Lowe revealed the bank would leave monetary policy accommodative for as long as needed.

The ‘Aussie’ also received further support thanks to increased risk appetite on hopes for a coronavirus vaccine to be ready by the end of the year.

The ‘Aussie’ could receive a further boost today following the release of Westpac’s Leading Index. If the index improves more than expected, it will boost the Australian currency.

Pound (GBP) Hits $1.27 for the First Time in Six Weeks

The Pound (GBP) rallied against a handful of currencies on Tuesday after its best day in three weeks, although Sterling struggled against riskier assets as market sentiment continued improving.

Sterling hit $1.27 against the US Dollar for the first time in six weeks as optimistic markets focused on a coronavirus vaccine and the EU’s agreement on the coronavirus recovery fund.

Looking ahead, little data means Pound traders will continue to focus on any shifts in risk appetite. If markets continue to remain upbeat, it could see GBP extend its rally into today’s session.

Euro (EUR) Rises to Strongest Level Since Early March

The Euro (EUR) rallied to its strongest level since early March during yesterday’s session after the European Union agreed upon a massive stimulus plan to help revive the coronavirus-battered economy.

The hard-won deal was labelled as an important sign of unity by leaders of the bloc and a foundation for recovery. However, this boosted risk sentiment and the single currency gave up some of its gains later in the session, although it will likely improve the long-term outlook for the Euro.

The Euro could make gains during today’s session following a speech from the Bundesbank’s Claudia Buch, if she makes optimistic comments about the recent stimulus plan.

US Dollar (USD) Slides as Risk Appetite Improves

The US Dollar (USD) struggled to make gains during Tuesday’s session as risk appetite improved after the EU agreed upon a recovery fund after a five-day summit.

Coronavirus vaccine hopes also buoyed risk appetite and sent traders flocking to riskier assets while sentiment was also offered support after the Chicago Fed National Activity Index improved in June.

Traders are likely to focus on today’s US housing data as June’s existing home sales are expected to rebound in June and could further boost risk appetite and send the ‘Greenback’ lower.

Canadian Dollar (CAD) Boosted as Oil Prices Jump to Levels Last Seen in March

The Canadian Dollar (CAD) made gains against safer bets as risk appetite improved. May’s retail sales rebounded by 18.7% while oil prices rose on the upbeat mood and improving recovery hopes. This took oil prices to levels last seen when a price war between Russia and Saudi Arabia began in early March.

Looking ahead, traders will be eyeing the latest Canadian inflation data. If inflation rises as expected in June it will offer the ‘Loonie’ further support during today’s session.

New Zealand Dollar (NZD) Boosted as Risk Appetite Rises

The New Zealand Dollar (NZD) rallied during yesterday’s session as risk appetite rose after EU leaders struck a deal for a huge stimulus plan to revive the bloc.

Reports of successful early trials for Coronavirus vaccines also offered support and will likely continue to support the ‘Kiwi’ during today’s session.

Upcoming Data:

22 July 10:30                       AUD                       Westpac Leading Index (June)                    0.5%

22 July 22:30                       CAD                       Inflation Rate (June)                                       0.3%

22 July 23:00                       EUR                        Bundesbank Buch Speech

23 July 00:00                       USD                       Existing Home Sales (June)                          23%

Louisa Heath

louisa.heath@torfx.com


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