On Monday, the Australian and New Zealand dollars kept close to the weekly highs, as risky assets came back in demand amid expectations that politicians around the world would take action to support economic growth.
Immediately, three events on Friday gave support to risky currencies. First, Beijing announced a new round of trade negotiations with Washington which noticeably weakened monetary policy and reduced the requirements for bank reserves in order to support the country's economy. In addition, investors were delighted by Fed Chairman Jerome Powell, saying that he would be patient with regard to raising interest rates. These events gave an impetus to the stock market and helped risk-sensitive currencies to update their highs.
However, traders should pay attention to the fact that the short-term impulse helped these currencies to be at the top but the risks that previously sent them to ten-year lows remain. In particular, any further slowdown in production in the United States or China could put pressure on the Australian dollar.
Recall that New Zealand and Australian dollars went into a tailspin last week, amid growing concerns about a possible recession in the United States, which called into question the further increase in the Fed rate. The uncertainty resulting from the trade war between the United States and China also became a burden for the market after the disappointing production data in both countries.
