Recently, Australian dollar witnessed a surge reversing the recent dropping trend, in conjunction with the rebound in commodities and interest rates maintained at record low. The Australian Dollar to US Dollar (AUDUSD) has recovered over 8.68% in the last three months (January 12, 2016 to April 11, 2016) triggered by various positive events across the globe after witnessing volatility on the back of concerns over a further potential slowdown in the economy. Accordingly, the Australian Dollar to British Pound (AUDGBP) rallied over 11.05% during the same period.
 

Australian Dollar (Source: The Australian Economy and Financial Markets April 2016 - Reserve Bank of Australia)
 
What we have seen recently is how the Bank of Japan (BOJ) implemented a negative interest rate 0.1% during January 2016 for the first time. This move by them raised a sense of panic in the global markets over the country’s fight against its slowdown in the economy. On the other hand, recently the bank of Japan assured that they would continue to enhance its monetary base at an annual pace of over 80 trillion yen while maintaining their negative 0.1 % of interest rate till the market conditions improve in Japan. Bank of Japan also signaled that they would further decrease the interest rates if required to improve the pace of the economic recovery. The Australian Dollar to Japanese Yen (AUDJPY) dipped 0.31% in the last three months (January 12, 2016 to April 11, 2016).
 

AUD/USD Daily Chart (Source: Thomson Reuters)
 
The rally in Australian Dollar to US Dollar also strengthened after the positive stance by FOMC who decided not to hike their rates for April during their recent FOMC meeting and even maintained the Federal Funds Rate in the 0.25% to 0.50 % range on track with its consensus estimate. However, Fed had decreased the economy performance to "moderate" in March 2016 against their "solid" statement in January. Fed also said that they are witnessing a soft Business investment environment against its previous "advancing" conditions due to the ongoing tough market conditions across the globe. But US continues to witness a “strong" job market in the US. The recent jobless claims data in US indicated that the four -week average, is maintained at 268,000 while the labor market conditions remain strong in the country. Moreover, the Fed also signaled that they might not consider hiking rates even in next sessions, if the economic conditions do not recover from the present environment. Consequently, the Australian Dollar to US Dollar (AUDUSD) surged slightly in the last four weeks. The Australian Dollar to US Dollar (AUDUSD) would also be tracking the developments in China and the commodity price changes in the coming months for stability.
 

Share Price Indices (Source: The Australian Economy and Financial Markets April 2016 - Reserve Bank of Australia)
 
Meanwhile, the support from OPEC members on considering oil freeze production is also favoring the Australian dollar. Recently, the OPEC updated that the Saudi Arabia, Kuwait and other partners are considering to freeze their oil production, although Iran is not supporting this move.
 
The Australian Dollar to British Pound (AUDGBP) was also seen recovering after the European Central Bank’s (ECB) president, Mario Draghi, undertook favorable moves to improve the stressed Eurozone economy.  European Central Bank is cutting interest rates, enhancing cheap loans to banks as well as expanding its asset-buying program to get back the Euro Zone on the growth track. ECB cut the main benchmark refinancing lending facility rate by 5 basis points to 0.25% and decreased the deposit facility rate by 10 basis points to -0.40%. Through its asset purchase program, European Central Bank is improving its monthly purchases by €20 billion to €80 billion against its earlier €60 billion target till March 2017. ECB might extend these measures until the Governing Council thinks that the inflation adjustments are back on growth. The Governing Council is aiming to reach over 2% inflation target for the medium term.
 

GDP Growth (Source: The Australian Economy and Financial Markets April 2016 - Reserve Bank of Australia)
 
AUDUSD was up 0.448% while AUDGBP was up 0.552% on April 12, 2016 (2:17PM GMT) and the recent trend showed an overall surge at the back of crude oil price changes and strength from global stocks. It looked to benefit greatly from the US dollar downtrend. However, again the Australian dollar was impacted around April 08, 2016 at the back of the insights on declining construction sector wherein activity contracted for a fourth consecutive month with a 13-month low in March 2016. Softness again prevailed given the weakening risk sentiment and lower commodity prices. With volatile conditions still persisting, more is yet to be seen going forward in this vicious circle of currency game.

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