Neil Davies, Head of Trading at PlutusFX, looks at the Aussie Dollar:
The trend for consistent falls in the Aussie Dollar has over the last few weeks been firmly broken.
The tracking of commodity prices going lower saw AUD/USD fall from 0.94 last September down to 0.753 in April. Since then the trend has been gently upward, but over the last couple of days, it has seen a 2% jump up in line with general US Dollar selling on the back of weak US economic data. This has pushed a Fed interest rate rise even further down the road. AUD/USD currently stands at 0.813.
This has somewhat scuppered the plans of the Reserve Bank of Australia, who had expressed a desire to see the currency trade in the low 0.7 range in order to aid global competitiveness and boost economic growth.
The Australian Treasurer has delivered his budget with a focus on helping aid small businesses in an effort to stimulate the economy, boost jobs and rebalance the economy away from its dependency on base resources. However, regardless of government policy, it is likely to only be improvements in US figures that are going to have a realistic chance of the desired currency weakness being achieved.