AUD extends recovery amid positive shift in sentiment

Daily Currency Update

A positive shift in sentiment has helped lift the AUD through 0.71 US cents to touch highs just shy of 0.7125 overnight. There is no obvious catalyst for the pivot in sentiment as a mixture of both positive and negative newsflow continues to disrupt normal market activity. Key equity indices rallied through trade on Monday dragging the AUD higher and safe haven currencies lower. The USD continued last weeks correction giving up ground amid rising growth concerns. The AUD found added support following a correction in USD/CNY. Despite reports Beijing recorded 99 new Covid 19 infections, a number of which are the result of increased community transmission the CNY found support following commentary from US president Joe Biden. Biden suggested the US would look to remove some of the import tariffs currently in place on Chinese goods in an effort to ease inflationary pressures. Added CNY support came on the heels of reports from Chinese Government officials affirming a commitment to an incremental easing of policy and new tax reliefs to help support businesses through sustained lockdowns. The stronger CNY provide welcome relief to the AUD.

With the Federal Election behind us and no real impact felt across AUD value our attentions turn back to growing inflationary pressure and central bank policy guidance for direction through the week ahead.