Aussie continues to creep higher, solidifying break above 0.71

OFX Daily Market News

Posted by OFX

AUD – Australian Dollar

The AUD held onto recent gains, marking fresh highs overnight as risk aversion continues to ease and investors spur commodity and growth led currencies higher. Despite an uptick in new COVID19 cases in Victoria, alarming GDP forecasts and increased US/China trade tensions the AUD crept nearer 0.72 USD as a sustained risk on mood continues to steer direction. Having touched intraday highs at 0.7180 the AUD edged lower into this morning’s open slipping back below 0.7150 and currently buys 0.7135 USD.

Having broken resistance at 0.70/0.7030 this week there is scope to suggest the AUD could extend gains toward 0.72 and possibly 0.73/0.74 by years end. The extension of JobKeeper and JobSeeker will continue to support those individuals and businesses worst hit by the COVID19 pandemic affording more time for the economy to recover. That said, the current packages will be amended a and a large swathe of Australians will see their benefits disappear adding increased pressure to already volatile consumer confidence and employment numbers. As the number of new COVID19 cases in Victoria continues to grow and pockets springing up in NSW there is a real threat State Governments will be forced to impose social distancing restrictions again, dampening the economic recovery. Attentions remain affixed to COVID19 headlines with risk still governing direction.

Key Movers

The Euro continued its advance through trade on Wednesday, marking its highest level in nearly two years as risk continued to spur demand in the wake of the EU leaders finalized Recovery Fund plan. The Single currency pushed through 1.16, touching intraday highs at 1.1601 before edging lower into this morning’s Australasian open. The USD remain weak amid signs its bull run may be ending. While uncertainty and risk aversion continue to provide a safe haven floor, fundamentals are starting to turn against the world’s base currency. Investors are shifting focus to Europe as the EU’s proactive and aggressive fiscal stimulus measures are expected to guide the area out of the coronavirus pandemic faster than their US counterparts as congress continues to battle partisan objectives, delaying much needed fiscal support. The Dollar index fell another two tenths of a percent on Wednesday, marking its lowest level since March. As real interest rates continue to fall demand for the USD as high yield play is also diminishing adding increased downward pressure. The USD did however advance against the Great British Pound as Sterling lost ground following reports the UK had abandoned hopes of securing a Free Trade Deal with the US before years end, while fears the Brexit Transition period will end without a deal grow. Having left the common market the UK is excluded from the EU Recovery Fund plans, funds that would be warmly welcomed as Britain’s debt continues to mount. Having slipped below 1.27 the GBP touched intraday lows at 1.2650 and is likely to remain under pressure as its economic future remains clouded.

Expected Ranges

AUD/USD: 0.6980 – 0.7220 ▲

AUD/EUR: 0.6080 – 0.6220 ▼

GBP/AUD: 1.7620 – 1.7980 ▼

AUD/NZD: 1.0630 – 1.0780 ▼

AUD/CAD: 0.9480 – 0.9650 ▼


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