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Is the Aussie strong or the greenback weak?

14092020_Currency

Is the Aussie strong or the greenback weak?

Large moves in global currency markets are always worth pondering. They don’t happen all too often and usually reflect large, global, macroeconomic changes that investors ought to keep an eye on. The recent strength in the Aussie dollar is an interesting case in point.

Putting aside the large dip and rebound in March and April, the Aussie dollar has continued to appreciate by around 10 per cent in the last three months against the US dollar. This is a significant move and, as noted by RBA Governor Philip Lowe recently, the Aussie dollar “has appreciated, to be around its highest level in nearly two years.”

As always, there are a number of countervailing forces on the Aussie dollar. First, with travel restrictions in place, foreign visitors cannot easily come to Australia and consume – a clear headwind for the currency.

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Andrew Macken is the Chief Investment Officer of the Montaka funds and the Montgomery Global funds. He established MGIM in 2015 in partnership with Montgomery.

This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.

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