The Australian dollar (AUD) has charged higher to 69 cents against the US dollar. It is largely been driven by
- A weaker US dollar
- Strong iron ore prices
A weaker US dollar
During the start of the COVID-19 pandemic, the US dollar got stronger and stronger. Fear griped the market, creating massive demand for US dollars and US dollar 'safe haven' assets like US treasuries. Since the middle of March, as infection rates in many western countries peaked, markets started to focus on the recovery. As conditions improved, markets became more optimistic, moving money back out of the US dollar, sending it lower.
Strong iron ore prices
The Australian dollar has traditionally had a strong relationship with commodity prices and in particular, iron ore. This is because it is one of Australia's most important and valuable exports. Recently, the iron ore prices has rocketed above US100 a tonne. This has been because there has been strong demand for the commodity in China as they ramp up steelmaking. At the same time, supply has been constrained from Brazil (one of the worlds largest suppliers) due to COVID-19 shutdowns.
AUD to USD exchange rates
|In the last week||0.6573||0.6900|
|In the last month||0.6376||0.6900|