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The AUD has slipped against a stronger USD this year, and it sits at the bottom of the pile against a set of other developed currencies, points out  Greg Gibbs, Analyst at Amplifying Global FX Capital.

Key Quotes

“The USD was broadly weaker until end January, and it was mixed and ranging on average through to mid April. Since then, it has strengthened across all currencies.”

“So why has the USD rebounded? It is due to a combination of the following factors:

  • US yields rose more than all others
  • Weaker Eurozone economic reports
  • More resilient US economic reports
  • A major correction in global equities at end January, since followed by volatile trading
  • Trump trade protectionist policy developments.”

“We could say much about the nuances and interactions of these factors and other developments that have turned the USD around this year.   It does appear that the USD may remain relatively strong for some time.”

“Looking at real effective exchange rates (REERs – trade weighted indices adjusted for relative inflation), the AUD is a little above its long run average.”

“The latest Bank for International Settlements (BIS) measures are for April, and knowing that the AUD has fallen since then, it is now a bit lower than +2.9% above its average.   The RBA measure is higher (+10.4%), but the latest data is a Q1 average, so the RBA’s measure does not pick up much of the AUD’s recent fall.”