Aussie buoyed by USD sell off and surprise uptick in Chinese Exports

OFX Daily Market News

Posted by OFX

AUD – Australian Dollar

The Australian dollar rebounded through trade on Thursday, advancing to touch intraday highs at 0.6501. US dollar profit taking and an uptick in the offshore Yuan helped bolster AUD demand as investors appeared to square positions ahead of what is expected to be a historic US non-farm payroll report. While US weakness helped drive a bounce off 0.6381 the AUD found added support in better than expected Chinese Export data. Trade balance numbers showed exports rose over 3% in April, well above the 15% depreciation priced in by markets and strong enough to drive the offshore Yuan higher while dragging the AUD and other commodity led currencies upward as well.

Attentions remain squarely affixed to fluctuation in risk sentiment as resistance forms on moves approaching 0.65. Analysts will be keenly attuned to today’s US non-farm payroll print as an integral marker indicating the health of the broader US economy. Markets are pricing in devastating number of job losses for April, but a print beyond conservative estimates will likely prompt a risk off run and perhaps weigh on the AUD into the weekly close.

Key Movers

The US Dollar retreated through trade on Thursday as investors appeared to correct positions and capitalise on early week gains before today’s Non-Farm payroll print. Analysts are anticipating labour market data will show an unprecedented number of job losses throughout April after another 3.1 million Americans filed for unemployment last week. Conservative estimates suggest over 21 million jobs have been removed from the economy in April, a staggering and historic labour market correction. The blinding speed to which not just the US economy but the global economy has come to a halt perhaps cannot be appreciated until broader context is provided. In the 10 years following the GFC the US economy added approximately 20 million new employment opportunities, a sobering reminder that the recovery and reallocation of labour will likely be a slow and languid process. Having given up two-week highs the dollar index lost three tenths of a percent having suffered losses against the Swiss Franc, AUD, CAD and NZD while the Euro bounced off two week lows to push higher on the day. The single currency has come under sustained pressure this week amid concerns the ECB’s stimulus scheme may be hamstrung following the German Constitutional Courts ruling earlier this week.

The Great British Pound touched a 16-day low despite a brief bounce following the Bank Of England policy announcement. The Monetary Policy Committee elected to maintain its current policy setting re-iterating it remains poised to take further action to counter the coronavirus pandemic. Sterling crept through 1.24 to touch 1.2418 before steadily falling as coronavirus and Brexit fears again outweighed near term demand forcing the pound through 1.23 to 1.2274.

Attentions shift to US non-farm payroll numbers as the headline item dominating the days agenda. With unemployment tipped to reach 16% a bigger hit will likely prompt an immediate risk off move and prompt a correction into the weekly close.

Expected Ranges

AUD/USD: 0.6200 – 0.6570 ▼

AUD/EUR: 0.5780 – 0.6050 ▲

GBP/AUD: 1.8720 – 1.9520 ▼

AUD/NZD: 1.0580 – 1.0720 ▲

AUD/CAD: 0.8980 – 0.9120 ▲


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