The Australian Dollar (AUD) rocketed higher against the US Dollar (USD) on Monday. It has since punched above the important psychological 0.6500 barrier and shot to fresh highs above 0.6550. The AUD/USD has rallied to a great extent. This increase coincided with a weakening of the US dollar and a global market return to a risk-on posture. Market participants pointed out that this advance nearly wiped out large losses suffered on Friday.
On Monday, AUD/USD showed impressive momentum as it took back and then some after last week’s backlash sweep. That said, analysts have pointed to a second coming of US dollar weakness. This pivot has been key in allowing AUD/USD to regain its composure. For several traders, the next target for the Australian currency to watch is the 0.6690 level. Sentiment is high, which makes it even more exciting.
At the same time, gold prices were under pressure, with bullion prices floating lower towards daily lows near $3,380 per troy ounce. The yellow metal fell for a multitude of reasons. MPs are welcoming a clearer risk-on sentiment and signalling that tensions in the Middle East are calming. As investors showed more optimism, gold’s status as a safe haven asset was further eroded, resulting in its offered tone on Monday.
Gold prices dropped as US yields barely rose. This tepid bounce in yields further fueled the bearish pressure on gold. As the US dollar weakened, the risk complex was afforded an opportunity to bounce. Even with such reversals, gold’s strong showing pervades the vivid tale of market reactions to geopolitical and economic upheaval.
At the same time, the Euro (EUR) saw significant moves as well, with EUR/USD breaking the psychological resistance of 1.1600 yet again. It failed to push its victories up the ballot to the north. The euro’s partial return to strength against the dollar reflects more general trends in global foreign exchange markets. It is influenced by major economic metrics and prevailing moods among investors.