Aussie holds onto gains as optimism and risk demand improved

OFX Daily Market News

Posted by OFX

AUD – Australian Dollar

The Australian dollar held onto Tuesday’s gains edging marginally higher through trade on Wednesday as risk sentiment improved and the currency enjoyed some overflow from the NZD uptick following the RBNZ policy announcement. The coronavirus’ rate of proliferation has slowed through recent days fostering increased confidence across markets that the economic impact will be short lived. Having touched 0.6740 the AUD opens marginally lower at 0.6735 as attentions now turn to commentary from RBA governor Lowe and key US inflation and consumer spending data. Watch resistance on moves approaching 0.6750 with supports intact on moves toward 0.6680.

Key Movers

The Euro downturn continued through trade on Wednesday slipping below 1.09 again and touching 1.0877, its lowest level in 3 years. Broader Euro area industrial production slumped through December following misses in Germany and Italy earlier in the week and adding to a host of poor data sets through recent months. The string of lacklustre macroeconomic indicators, when compared with strength across key US data sets has helped foster a carry trade run on the single currency as investors short the combined unit in a race to chase a higher yield return. With calls for further policy easing gaining momentum we expect the Euro will remain under pressure through the medium term.

Safe haven’s fell as risk sentiment continued to improve as fears of a sustained economic downturn on the back of the coronavirus eased through trade on Wednesday. The JPY and the CHF were the days big losers, with the USD/JPY pushing back above 110.

Attentions remain squarely affixed to coronavirus headlines as the primary driver of risk demand while US CPI inflation data and domestic retail sales numbers headline the macroeconomic docket into the weekly close.

Expected Ranges

AUD/USD: 0.6680 – 0.6780 ▲

AUD/EUR: 0.6130 – 0.6230 ▲

GBP/AUD: 1.9080 – 1.9405 ▼

AUD/NZD: 1.0380 – 1.0520 ▼

AUD/CAD: 0.8880 – 0.8960 ▲


Posted by OFX

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