AUD falters again on approach to 0.70 US cents

OFX Daily Market News

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AUD – Australian Dollar

The Australian dollar crept higher through trade on Wednesday, buoyed by a softer USD and an uptick across equities and commodity prices. Having traded sideways through much of Wednesday the AUD regained upward momentum, again closing in on 0.70 US cents. The AUD touched intraday highs at 0.6985 but failed to extend the advance as global risk demand faltered and reports emerged that two new cases of COVID19 have been found in the ACT after two travelers returned home from Melbourne.

Resistance on moves approaching 0.70 seems firmly intact with the AUD struggling to break outside the 0.68 – 0.70 range through the last month. Markets continue to weigh the promise of a swift economic rebound against the spectra of rising COVID19 cases and a protracted economic rebuild. A renewed surge in risk demand is required for the AUD to push back through 0.70 US cents, while a flight to safety should test recent lows. With COVID19 still spreading without resistance the promise of a swift rebound through the latter half of 2020 is fading as it is increasingly likely social distancing restrictions will need to remain in place through the foreseeable short term. While fiscal and monetary policy continue to prop up risk assets the battle between risk demand and fundamental drivers will continue.

Key Movers

The Great British Pound rallied through trade on Wednesday, pushing through 1.26 following news of a new 30billion pound fiscal stimulus package. Chancellor of the Exchequer, Rishi Sunak, unveiled plans for new fiscal support program designed at driving and supporting the property market, while underpinning key retail and service sectors and providing tax incentives for employers to hold onto employees through this crisis. The plan is the next stage in the governments fiscal response to the economic destruction caused by COVID19 , fueling market demand for the GBP.

The Euro was dragged higher by Sterling’s upturn pushing back through 1.13 to touch intraday highs at 1.1330, while the USD tumbled to a two week low. Reduced safe haven demand drove commodity currency higher, while extend fiscal stimulus helped support the GBP and Euro, forcing the DXY dollar index half a percent lower. With the US still the epicenter of the worlds fight against covid19 investors are conscious that the worlds largest economy faces a protracted recovery period, fueling demand for other asset classes with nothing but haven demand propping up the worlds base unit.

Expected Ranges

AUD/USD: 0.6800 – 0.7020 ▲

AUD/EUR: 0.6080 – 0.6220 ▲

GBP/AUD: 1.7980 – 1.8120 ▼

AUD/NZD: 1.0580 – 1.0650 ▲

AUD/CAD: 0.9380 – 0.9480 ▼


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