The world around us today is a world that is more unstable than it has been in a long time. One of the biggest catalysts for this global instability is the international coronavirus pandemic that has been sweeping the planet for the last six months or so. What first started out as a few cases in China quickly ballooned, with new cases being announced around the globe every other day. There have been many knock off effects from this pandemic, with one of the biggest and most internationally felt of them all being the effect on the trading market.
The foreign exchange market is being impacted in just about every possible way. Think of the current state of the Australian dollar, for instance. The Australian dollar has been through more than its fair share of ups and downs recently. This week, however, the Australian dollar reached its highest level since July last year (2019). Earlier this week, the Australian dollar was trading at 70.41 US cents, a more than welcome change from its historic low back in March. This is the first sign of the Australian dollar recovering since the pandemic tipped the entire world onto the verge of economic collapse.
Because the Australian dollar is so positively aligned with a global sentiment, it makes all the sense in the world that the Australian dollar both benefits from an economy that is flourishing in good health and momentarily struggles when the globe enters an economic crisis. In many ways, these ebbs and flows were to be expected, however nobody could have predicted just how low - and now, just how high - the Australian dollar was going to dip and rise. As we head forward and beyond, we are going to see many more dips and rises, so while the current position and global value of the Australian dollar is quite strong, this could (and likely will) of course go through dips and rises over the next twelve months as the international economy continues to evolve and repair itself.
This week, the Australian dollar sits at its highest value in nearly a year. Next week, we have no way of knowing how we can expect the Australian dollar (or the entire foreign exchange market, for that matter) to continue to perform, both in and of itself and as part of the foreign exchange market. Watch this space.
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