Aussie tumbles as unemployment rate jumps

OFX Daily Market News

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AUD – Australian Dollar

The Australian dollar tumbled through trade on Thursday, plumbing new 11 month lows as a disappointing labour market print and an uptick in risk off demand drove direction. The unemployment rate unexpectedly jumped through trade on Thursday increasing from 5.1% to 5.3%. While the uptick can be largely explained by an increase in the participation rate rather than a distinct slowdown in labour market performance the upturn still sparked calls for an imminent RBA rate cut and drove the AUD below 0.6650.

Despite China announcing a slowdown in the spread of the Coronavirus, its proliferation in other countries, namely, South Korea, Japan and Singapore amplified concerns the virus will linger for some months to come, increasing the scope and scale of the economic impact. With risk on demand largely evaporated the AUD touched intraday lows at 0.6615 and appears to have consolidated a break below supports at 0.6680 setting up a shift to lower bound ranges moving through the short term.

Key Movers

The US Dollar advance continued through trade on Thursday, touching three-year highs when valued against a basket of major currency counterparts. Sustained strength across key macroeconomic indicators and an economy that is largely immune to the threats of the coronavirus has helped fuel demand for the world’s base currency as a key safe haven play.

The Euro depreciation continued Thursday, posting intraday lows at 1.0780 driven by a persistent carry trade play and sustained softness across key macroeconomic indicators. The combined unit has struggled against the US dollar throughout the year to date as the mismatch between key major economic data sets highlights the gap in expected monetary policy programs moving through the year ahead. Having tumbled over 3% through the year to date attentions now turn to key services and manufacturing PMI data prints as markers guiding direction into the weekly close.

Despite an uptick in domestic retail sales the Great British Pound fell to intraday lows at 1.2849 through trade yesterday. Thursday’s downturn marks a 1.4% depreciation through the week thus far and sees sterling unwind all last weeks gains as mounting expectations for increased fiscal stimulus have abated and the likelihood of a Bank of England rate cut before year end gained further traction. Futures are now pricing an 80% chance of a rate cut by December, up from 69% on Wednesday.

Expected Ranges

AUD/USD: 0.6580 – 0.6680 ▼

AUD/EUR: 0.6080 – 0.6180 ▼

GBP/AUD: 1.9280 – 1.9630 ▲

AUD/NZD: 1.0380 – 1.0480 ▼

AUD/CAD: 0.8720 – 0.8840 ▼


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The Greenback overtakes the Yen in terms of “safe haven status,” at least until virus worries dwindle.

OFX Daily Market News

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USD – United States Dollar

The U.S. dollar replaces the Japanese Yen as a safe haven, at least temporarily due to virus concerns. The Greenback is higher against their Group of 10 peers and emerging currencies after news that South Korea announced its first confirmed death resulting from the virus. In general, the U.S. dollar continues to outperform, as it is less weak compared with the rest of world’s economies, there are decent earnings numbers in the U.S., and there are ongoing worries over the threat of recessions in Japan and the Eurozone.

Initial job claims in the U.S. came in at 210,000, matching the estimates, causing the EUR/USD to spike ten pips towards 1.0804 (The Euro is still trading at very low levels).

Yesterday, at 2 pm EST, the Fed minutes indicated they could leave interest rates unchanged for many more months amid concerns about a persistent undershoot of their inflation goal, potential room to boost further employment, and risks coming from the coronavirus and trade. However, market participants keep expecting the that the Fed will lower interest rates at least once this year, pricing in about 40 basis points of easing by the end of December this year. The Greeenback continues rising and has ignored those expectations.

From a market sentiment perspective, this U.S. dollar’s strength might be a massive capitulation by almost anyone who isn’t a dollar bull.

Key Movers

The Yen had the most significant fall versus the U.S. dollar in 6 months yesterday, with market participants unwinding their bets in favour of the Yen. The USD/JPY is in a rally mode, increasing 0.58 percent so far. Technically speaking, once the USD/JPY broke the 110.29 level to the upside, it has been unstoppable, showing a bullish formation for that pair (bearish for the Yen). The Yen is trading at 111.99 at the time of this writing. Even the CAD/JPY pair is in a rally mode, trading at 84.44 at the time of this writing and showing a 0.24 percent appreciation.

The Australian dollar got hammered to an 11-year low last night after a rise in the January unemployment rate.

The Pound versus the U.S dollar pair failed to breach day highs after better-than-expected U.K. retail-sales data. The Sterling fell after some sophisticated market participants stopped out long positions when they saw the Pound failing to make new highs despite the positive data. It is too early to say that recent developments will see a significant U-turn in Bank of England sentiment.

The EUR/USD pair is trading above a strong support around 1.0790 and a critical resistance level of 1.0808 at the time of this writing.

Expected Ranges

USD/CAD: 1.3225 – 1.3255 ▼

EUR/USD: 1.0794 – 1.0827 ▲

GBP/USD: 1.2850 – 1.2936 ▲

AUD/USD: 0.6600 – 0.6670 ▼

NZD/USD: 0.6300 – 0.6367 ▼


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Aussie dollar nears multi year lows

OFX Daily Market News

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AUD – Australian Dollar

The Australian dollar is weaker this morning when valued against the Greenback, falling to an overnight low of 0.6665 the lowest since February 9. The Aussie dollar has now fallen for a fifth consecutive day amid US dollar strength and continued coronavirus headlines. On the data front yesterday we saw the release of Westpac Leading Index which came in at 0.05% in January, slightly better than the previous 0.01%.

The last six months annualised growth rate fell from -0.28% in December to -0.46% in January. We also saw the release of Q4 Wage Price Index which saw wages continue to grow at an unimpressive pace, as expected, rising just 0.5% q/q in Q4 19. On a y/y basis wage growth remained at 2.2%, taking average 2019 wage growth to 2.28%.

Looking ahead today and we will see the release of the latest employment figures which is expected to have added 10,000 new jobs in January, after adding 28,900 in the previous month. The unemployment rate is expected to rise to 5.2% from 5.1% while the participation rate is seen steady at 66%. From a technical perspective, the AUD/USD pair is currently trading at 0.6678. We continue to expect support to hold on moves approaching 0.6660 while now any upward push will likely meet resistance around 0.6730.

Key Movers

The US Dollar Index (DXY) which measures a basket of major currencies against the greenback continued its rampant moves overnight hitting three-year highs. Improved risk appetite in markets and strong domestic data out of the United States saw movements out of traditional safe haven currencies such as the Japanese Yen, falling to nine-month lows and a 1.35% drop on the day’s trade.

The Federal Reserve released their monthly meeting minutes a couple of hours ago and noted that the current stance of monetary policy is appropriate. Holding rates between a range of 1.5% and 1.75% will give Chairman Jerome Powell time to analyse the current impact of the coronavirus for the local economy.

Core United States Producer Price Index for the year rose to 1.7% from 1.1% and rose 0.5% on a monthly basis, continuing the recent theme of positive economic data for the start of 2020.

The same could not be said for the EUR as it lost further ground, hitting lows yesterday of 1.0782 following a sharp decline in economic sentiment in Germany. A number of data releases will dictate any further decline for the common currency as ECB Monetary Policy Meeting accounts are due for release this evening.

Expected Ranges

AUD/USD: 0.6640 – 0.6710 ▼

GBP/AUD: 1.9100 – 1.9520 ▼

AUD/NZD: 1.0420 – 1.0490 ▼

AUD/EUR: 0.6150 – 0.6210 ▼

AUD/CAD: 0.8800 – 0.8870 ▼


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The Greenback keeps rising against G10 currencies, with Trump's speeches fueling its increase even further.

OFX Daily Market News

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USD – United States Dollar

The Greenback is increasing against the Euro, the Pound, and the Aussie dollar by 0.02, 0.15 and 0.11 percent respectively. However, it is paring gains ahead of several Federal Reserve speakers and the release of the January Federal Open Market Committee meeting minutes later today at 2:00 pm EST. The January producer price index demand came in at 0.5 percent versus the 0.1 percent expected. However, right after this release, the U.S. dollar was little changed. The USD/JPY pair edged to fresh trend highs of over 110.65, while the EUR/USD pair dipped under 1.0800. Furthermore, the Greenback has been increasing along with other commodity currencies in overnight trading amid signs that China is planning further stimulus measures to shield its economy from the coronavirus outbreak.

Yesterday, President Trump, in a rare move, intervened to stop his own administration’s developing plans to block sales of General Electric-made jet engines to China and other proposed restrictions on American exports. Trump said that national security is being used too often by his officials to limit American companies’ ability to transact with China. Surely this gave a boost to a better environment in the FX capital markets, where the Yen is the biggest loser and the U.S. dollar is still the king. Trump also added, “I’ve been very tough on Huawei. But that doesn’t mean we have to be tough on everybody that does something. We want to be able to sell all of this incredible technology – we’re number one in the world.”

Key Movers

According to Statistics Canada, the Canadian CPI came in at 2.4 percent y/y in January, while 2.3 percent was anticipated. The most significant upside contributor to monthly inflation was the food category. The most important upside contributor to yearly inflation was the transportation category. The USD/CAD pair touched and then bounced slightly from the 200 moving average at 1.3218 this morning. The Loonie is soaring around 0.3 percent versus the U.S. dollar

According to the Office for National Statistics in the U.K., inflation in January rose to a six-month high as energy and house prices rose. The CPI came in at 1.8 last month, up from 1.3 percent in December. According to Ruth Gregory, Senior U.K. Economist at Capital Economics, “…the fact that inflation is in line with its projections provides another reason not to cut interest rates in the near-term.” The rate currently stands at 0.75 percent. The BoE’s next meeting is due on March 26th. He said: “Rishi Sunak is likely to use the Budget to announce a welcome boost to longer-term investment, but stand for the fiscal rules for short-term spending until the fog has cleared.”

Chancellor of the Exchequer Rishi Sunak confirmed that he would disclose the Johnson government’s budget on March 11th, and cancelled a trip to meet G-20 finance ministers in Riyadh on Feb. 22-23rd. The potentially radical budget could see Sunak rip up spending rules and put a more substantial tax burden on wealthy people.

Expected Ranges

USD/CAD: 1.3215 – 1.3243 ▼

EUR/USD: 1.0785 – 1.0835 ▲

GBP/USD: 1.2948 – 1.2984 ▼

AUD/USD: 0.6660 – 0.6697 ▼

NZD/USD: 0.6375 – 0.6414 ▼


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AUD falls as probability of rate cut increases and markets dump risk assets

OFX Daily Market News

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AUD – Australian Dollar

The Australian dollar fell through trade on Tuesday as risk off sentiment and a dovish RBA minutes prompted a correction in the recent short-term upswing. The AUD slipped below 0.67 touching intraday lows at 0.6675 as markets appetite for risk shifted following Apple’s announcement it does not expect to meet revenue targets through Q1 2020 as the coronavirus dampens demand for sales in China. Apple’s revelation highlighted broader market concerns the coronavirus will have a direct deflationary impact on global consumer demand and economic growth forecasts. As demand for risk faltered the RBA minutes confirmed the RBA’s bias to further rate cuts and concerns surrounding the broader impact of the Coronavirus. The board recognised the outbreak posed significant downside risks to outlooks for China and, as a direct result of Australia’s high-level integration into the Chinese economy, there was heightened concerns the domestic growth outlook will be forced lower.

While supports remain in play on moves approaching 0.6680 our attentions now turn to todays quarterly wage price index and Thursday’s employment data. The RBA has long touted strength across the labour market as a key marker supporting neutrality in monetary policy. Softness across wage growth and a downturn in labour market performance could prompt a move below key technical supports as markets move to price in a rate adjustment. We expect resistance on moves above 0.6730 with a consolidate and extended move below 0.6680 possibly signalling a deeper downward correction.

Key Movers

Safe haven assets surged through trade on Tuesday with the Japanese Yen outperforming most major counterparts.

The Great British Pound edged higher as the new Finance Minister Rishi Sunak announced the budget would be unveiled as planned on March 11. Shrugging aside concerns conflicting views between the UK and EU would derail trade negotiations sterling pushed back through 1.30, touching 1.3047 before correcting lower into the mornings open.

The Euro tumbled through 1.08 Tuesday following a ZEW assessment of broad based German confidence. Sentiment among investors deteriorated well beyond initial estimates in February and highlighted concerns Europe’s largest economy and engine room is running out of steam. The poor print amplifies concerns services and manufacturing PMI data due Friday will show an alarming slowdown in broader European production further dampening growth expectations and widening the gap between the US and EU outlook. The combined currency has lost almost 4% through the year to date, with little incentive for investors to unwind recent shorts and carry trades. Having touched 1.0787 attentions now turn to Thursdays’ ECB monetary policy meeting minutes for any sign increased QE is imminent.

Expected Ranges

AUD/USD: 0.6630 – 0.6730 ▼

AUD/EUR: 0.6150 – 0.6230 ▲

GBP/AUD: 1.9330 – 1.9780 ▲

AUD/NZD: 1.0380 – 1.0530 ▲

AUD/CAD: 0.8790 – 0.8890 ▼


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AUD range bound ahead of key Wage Growth indicator and labour market data

OFX Daily Market News

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AUD – Australian Dollar

The Australian dollar remained largely range bound through trade on Monday bouncing between supports at 0.6715 and resistance at 0.6735 as updates from China suggest the coronavirus remains relatively stable. While the number of new cases rose over the weekend, the death rate slowed, easing market fears and when combined with increased fiscal stimulus from Beijing prompted an upturn in risk driven support.

Attentions now turn to the February RBA monetary policy meeting minutes for direction through trade on Tuesday as the Quarterly Wage Price Index Wednesday and Employment data Thursday provide key markers guiding future RBA interest rate direction. Softness across wage prices and a correction in recent labour market strength will add increased pressure on policy makers to cut interest rates before the second half of 2020 and could act as the catalyst driving the AUD below key supports at 0.6680, while a surprise upturn should consolidate supports and prompt a drive toward 0.6750.

Key Movers

The Great British Pound edged lower through trade on Monday, giving up gains enjoyed in the wake of Boris Johnson’s cabinet re-shuffle and the appointment of Rishi Sunak as finance minister. Prime Minister Johnson has pushed for an uptick in fiscal spending and Sunak is expected to let the tap flow freely in a bid to stimulate domestic economic growth and ease the burden of the Brexit transition. Having touched highs at 1.3070 sterling slipped below 1.30 and opens this morning at 1.2998. With support in play on moves approaching recent lows at 1.2873 and resistance at 1.3070/1.31 attentions turn to CPI and Core CPI inflation data prints Wednesday and composite PMI data Friday as a key markers governing Bank of England Policy direction.

The Euro struggled to bounce off recent lows through trade on Monday as persistently lacklustre macroeconomic indicators continued to weigh on investor sentiment. With little data on hand to drive early week direction the combined unit failed to shrug off signs the German economy is beginning to falter as attentions turn to key data sets. German ZEW economic sentiment report Tuesday and key manufacturing and services data Friday govern short term direction and demand for carry trades. Having traded near 3 year lows the currency has lost over 2% throughout February and remains poised to extend the break.

Expected Ranges

AUD/USD: 0.6680 – 0.6750 ▼

AUD/EUR: 0.6080 – 0.6210 ▼

GBP/AUD: 1.9280 – 1.9430 ▼

AUD/NZD: 1.0380 – 1.0480 ▲

AUD/CAD: 0.8850 – 0.8920 ▼


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Australian Dollar opens the week steady above 67 US cents

OFX Daily Market News

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AUD – Australian Dollar

The Australian dollar regained its recent foothold in the 67-cent region after opening the week with uncertainty as global risks continually hamper the local currency. Gaining 0.6% for the week, the AUD/USD finished at 0.6712 at Fridays New York close following the release of stable United States Retail numbers for the month of January.

Investors continued to keep a close watch on coronavirus news as global growth outlooks look to be reshaped in the short to medium term. News of a reduction in reported outbreaks over the weekend for the third straight day hopes to improve risk appetite for commodity-based currencies into the new week.

It is a busy week domestically for macroeconomic data with Monetary Policy Meeting Minutes set for release on Tuesday, followed by Wage Price Index and Employment figures scheduled mid-week. The Australian dollar opens steady this morning at 0.6722. We expect support levels to hold on moves approaching 0.6680, while any upward push will likely meet resistance at 0.6750.

Key Movers

The US Dollar continued its march higher in line with equities for 2020 as the US Dollar Index (DXY) reached its highest level since October on Friday evening at 99.17. With the attraction of safe haven flights in play and upbeat local data highlighted by bullish consumer sentiment on Friday, the world largest traded currency could test 2019 highs of 99.67 over the coming week. Consumer spending in the United States rose modestly or the first month of 2020 as retail sales posted numbers of 0.3% in line with expectations.

The single currency in Europe saw further falls last week, hitting two-year lows of 1.0829 against the US Dollar and four-month lows at the Japanese Yen. Continuing to set a bearish tone in the markets, weak economic data and political instability in Germany is likely to weigh on the Euro in the short term.

Global Markets are set to see a drop in liquidity to start the week as the United States observes President day.

Expected Ranges

AUD/USD: 0.6680 – 0.6750 ▼

GBP/AUD: 1.9220 – 1.9750 ▲

AUD/NZD: 1.0400 – 1.0500 ▲

AUD/EUR: 0.6150 – 0.6220 ▲

AUD/CAD: 0.8860 – 0.8950 ▼


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The U.S. dollar falls following weak industrial production.

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USD – United States Dollar

The greenback slips towards an intraday session low as U.S. treasury yields fall, following weaker-than-expected U.S. retail sales data. The retail sales control group had 0 percent increases (flat) in January versus expectations for a 0.3 percent gain; the prior month came in at 0.5 percent. However, the adjusted retail sales less autos and gas stations came in at 0.4 percent versus the 0.3 percent expected.

Another critical piece of information that was released a few minutes ago was the Industrial Production data. January industrial production fell 0.3 month to month after falling 0.4 percent in December. Industrial output has declined in four of the past five months.

Key Movers

It has been interesting to watch the Euro weaken versus different currencies over the last few hours and go beyond critical technical levels. However, there hasn’t been an obvious catalyst for the weakness in the Euro, other than perhaps the potential impacts of the Coronavirus on Chinese demand for European exports, which might affect the U.S. as well. At this moment, the EUR/USD pair trades at 1.0855. It has bounced over the last few minutes, up more than 0.1 percent against the U.S. dollar. The British Pound versus U.S. dollar is trading at 1.3015, down 0.2 percent.

The Japanese Yen increased against the U.S. dollar and Aussie dollar after the Center for Disease Control confirmed a 15th case of the Coronavirus in the U.S. A Fox news White House reporter tweeted that the U.S. administration believes China is “severely” under-reporting the number of deaths from the virus. At the time of this writing, the USD/JPY and AUD/JPY pairs are trading down 0.03 and 0.01 percent, respectively (stronger yen).

Expected Ranges

USD/CAD: 1.3234 – 1.3285 ▼

EUR/USD: 1.0827 – 1.0880 ▲

GBP/USD: 1.3000 – 1.3050 ▼

AUD/USD: 0.6687 – 0.6720 ▼

NZD/USD: 0.6416 – 0.6440 ▼


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Aussie spike checked as reported cases of Coronavirus dampens risk demand

OFX Daily Market News

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AUD – Australian Dollar

The Australian dollar tracked sideways, struggling to break above 0.6750 as investors remain wary and reluctant to extend gains as the uncertainties surrounding the coronavirus were amplified Thursday. The number of reported cases in China spiked, re-igniting fears the virus will continue to proliferate at an unchecked pace, further dampening the global growth outlook. Dipping during the Asian session the AUD touched intraday lows at 0.6707 before finding some support and bouncing between 0.6745 and 0.6720 through the rest of the day.

The coronavirus remains the primary driver governing AUD direction as headline news updates prompt shifts in risk sentiment and amendments in expectations as to the broader economic impact. At present the AUD appears well supported at 0.6680, however a number of breaks below this handle suggest a consolidated move lower is possible should conditions worsen, and risk appetite evaporate completely. Australia’s close economic ties and reliance on the juggernaut that is the Chinese economy leaves the AUD particularly vulnerable to adverse headline updates. With little of note on the domestic macroeconomic docket today we expect the AUD to maintain recent ranges into the weekly close.

Key Movers

The Euro tracked lower through trade on Thursday touching fresh multi-year lows at 1.0834 as market demand for risk faded and investors looked to short the combined currency. A string of soft macroeconomic data sets and a clouded or bleak growth outlook have prompted markets to dump the Euro and chase a higher yield return.

The Great British Pound was the days big mover, jumping after the resignation of finance minister Sajid Javid. Markets speculated that the new chancellor of the exchequer, Rishi Sunak, will drive fiscal expansion, lower capital gains taxes, issue tax cuts and increase investment infrastructure spending. Sterling rallied back through 1.30 to touch 1.3068.

Attentions today turn to US retail sales data as the headline item on the macroeconomic docket.

Expected Ranges

AUD/USD: 0.6680 – 0.6750 ▼

AUD/EUR: 0.6130 – 0.6230 ▲

GBP/AUD: 1.9080 – 1.9530 ▲

AUD/NZD: 1.0410 – 1.0490 ▲

AUD/CAD: 0.8880 – 0.8930 ▼


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The Euro – U.S. dollar pair falls to the lowest price since May 2017 and the Pound recovers some positive momentum.

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USD – United States Dollar

The EUR/USD pair falls to the lowest price since May 2017, with drivers coming from the European and Asian session, making the EUR/USD pair trade at 1.0855 at the time of this writing and representing a 0.17 percent fall (stronger U.S. dollar). Even though we would have expected the U.S. dollar index to touch to a new high due to the Euro’s weakness, the U.S dollar index has only reached a new high since October 2019 (while the Euro has reached a new low not seen since 2017). This clearly shows that the strength of the U.S. dollar is more about the Euro’s weakness than strong U.S. fundamentals.

Just as the North American session ended yesterday at 5 pm EST, the Japanese Yen rose from a three-week low against the dollar on Thursday as investors sought safe havens after China’s Hubei province reported a sharp jump in the number of new cases. Hubei on Thursday reported 14,840 fresh cases of the virus as of Feb. 12, up from 1,638 new cases on Tuesday, with the number of deaths in the province rising by to a new daily record of 242 and increasing the total deaths in the province to 1,310.

U.S. CPI may be a short-term driver this morning in North America for the Greenback. The expected number is 0.2 percent in the month and 2.4 percent in the year. If we see the chart of the CPI, it looks as though an uptrend has developed over the last few months, which is influencing market participants to push the Greenback higher this morning. Initial jobless claims are also being released today along with more employment weekly data in the U.S.

Key Movers

The British Pound pared gains against the U.S. dollar before recovering ground after reports that U.K. Chancellor of the Exchequer, Sajid Javid, resigned from Boris Johnson’s government. The GBP/USD pair is trading at 1.3007 at this moment. It is hard to evaluate the Pound in the medium-term, but, right now, the Pound’s bounce is more linked to Johnson’s wish to boost the fiscal impulse more than Javid’s rules would imply. Therefore, market participants are buying more Pounds following Javid’s resignation and causing speculation that the U.K. may move towards more fiscal stimulus.

Expected Ranges

USD/CAD: 1.3224 – 1.3280 ▲

EUR/USD: 1.0850 – 1.0910 ▼

GBP/USD: 1.3000 – 1.3070 ▲

AUD/USD: 0.6720 – 0.6760 ▲

NZD/USD: 0.6438 – 0.6504 ▲


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