These are just a few of the main reasons behind the current strength of the Australia dollar. But how is it expected to perform over the coming months? Most forecasts are based on the premise that as long as strong terms of trade continue between Australia and Asia, so too should the strong currency. There has, however, been some backlash against the strong Australia dollar because there are both winners and losers when it comes to a strong exchange rate.
A strong Australian currency hurts those who rely on the flow of foreign capital to make a living. OIL GOLD 1, CMC Crypto 1, NZX 50 12, FTSE 7, Dow Jones 36, DAX 16, Hang Seng 25, Read full article.
More content below. Jessica Yun. In this article:. Which way will the Aussie dollar go this year? That is remarkable. Here are a few reasons why the Australian dollar has gotten so strong, so quickly.
Part of the reason the Australian dollar bounced back so hard is that in March, it may have fallen too far. On the other side of this, markets also pushed the US dollar higher as investors looked for a safe haven in volatile markets.
Certainly the speed of the recovery in the Australian dollar since March suggests that the market was adjusting for an overcorrection. Treasury yields spiked overnight as investors bet that inflation would bring forward interest rate rises, and they hovered just below these levels during the European morning session.
Standard Chartered FX analysts wrote in a client note that they expect currency market risk sentiment to be limited until the Fed next week, where "hawkish risks are still under-priced". The data prompted a spike in short-term yields. The Reserve Bank of Australia meets on Tuesday next week and market pricing is at odds with RBA policymakers' insistence that there will be no rate hikes before The U.
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