The Australian Dollar has seen a resurgence in recent days, following its massive drop mid March. At its lowest, the Aussie had traded at 0.5749 against the USD, but has steadily been climbing back up, and is now at 0.6482 and continuing to climb. Moving ahead, AUD/USD has a strong support at 0.6439, which gives further credence for it to keep rising.
Likewise, the New Zealand Dollar has also made a comeback, although not to the same level. The NZD/USD pair is currently trading at 0.6039, lower than its neighbour. This is most likely due to the difference in the severity of the lockdown between the two countries. For the past month, New Zealand has been in Level 4 of its COVID-19 alert phase, which meant that the entire country was under lockdown. Of course, this has meant that the economy has been under severe strain. While New Zealand has now moved back to Level 3 as of today, with over 400,000 workers returning to their jobs. That's almost 10% of the population, which will undoubtedly give a boost to the Kiwi Dollar, but many businesses still remain closed.
On the contrary, while Australia has also been in lockdown, it has varied by state, and overall has been less restrictive than New Zealand’s. For example, while in New Zealand people have not been allowed to leave their homes unless they were essential workers or for exercise, Australians can still order food, and shop for some non-essential items. This has allowed the Australian economy to not suffer the same level of stress, and thus is most likely the reason why the Aussie has made larger gains over the past few weeks.
While it is still uncertain how long Australia’s lockdown will last, the effectiveness of its lockdown has given investors hope in the strength of the Aussie Dollar. While the coronavirus may have impacted the Australian and New Zealand Dollars in the short term, the fact that they have been able to effectively stop the virus from spreading any further gives hope for investors that their economies will be able to recover sooner and faster than other countries.
With the Level 4 lockdown now over in New Zealand, our team of analysts are now back in the office and ready to resume our usual content. This means we will no longer be livestreaming on YouTube, but we will be uploading our daily Trade in 60 seconds videos again. For our first day back in the office, we talked about the Aussie dollar, which you can see below here: