AUD holds onto gains; Is the US dollar bull run coming to an end?

OFX Daily Market News

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AUD – Australian Dollar

The Australian dollar maintained its upward momentum through trade on Monday, pushing back above 0.71 amid broad based US dollar weakness. Having opened below 0.7090 the AUD climbed steadily throughout the day marching back toward 0.7150 and intraday highs at 0.7151. Despite a sustained demand for risk assets the AUD fell short of last weeks 15 month high at 0.7183, meeting and bouncing off resistance as concerns over growing COVID19 infections in Victoria weighed down the upturn. Victoria reported 532 new coronavirus infections on Monday, the countries worst daily increase since the Pandemic began. Lockdown and social distancing measures in force through the last two weeks appear to have done little to force a downturn in daily infections, raising concerns level 4 restrictions will need to be enforced in the coming days. With fears mounting the outbreak could spread into NSW there is a risk the broader national recovery may be derailed.

Attentions today remain with COVID 19 headlines and broader risk demand. Despite our domestic outbreak we maintain our bullish outlook for H2. Broad based US weakness should help support extended AUD upside in the months ahead with a consolidated break above 0.7150 opening the door for an extension toward and beyond 0.72. There are of course risks to this outlook. Uncertainty across markets remains high and conviction thin, a broader shift in risk demand and widespread global shutdown amid a 2nd wave of infections across Europe could force a flight to safety, weighing on the AUD rebound.

Key Movers

The US dollar collapsed to a two-year low against the Euro on Monday amid losses against most major counterparts as the spread of COVID 19 continues unchecked. Florida passed New York as the State with the second highest number of Coronavirus infections, while California continues to battle an unwelcome surge in new cases, now the worst hit of all 50 States. There is mounting concern that unemployment benefits will dry up come the end of the week. Republicans are tipped to put forth a relief bill on Monday/Tuesday at which point Democrats will have the opportunity to critique the proposal and push their own agenda. With partisan politics in full swing leading into the election there is real scope to suggest both parties will not agree a compromise in time, escalating calls for a short-term stopgap measure to prop up those devastated by record job losses. Heightened uncertainty within the US has forced us to push back our timeline for recovery with the US likely to lag major counterparts in bouncing out of the pandemic and economic crisis. The Fed is expected to affirm its commitment to long run low interest rates on Wednesday with uber loose monetary policy likely to be in play for years to come. As real US interest rates remain under pressure and US economic performance falters there is ample capacity for extended USD downside through H2.

Capitalising on USD weakness the Euro upturn continued Monday, outstripping major counterparts and pushing through 1.17 and 1.1750 to touch two-year highs at 1.1775. The single currency has been the primary benefactor in the shift away from the worlds base currency as the EU proactive and aggressive fiscal support program has bolstered hopes for a swift economic recovery and a unified Europe.

Expected Ranges

AUD/USD: 0.7020 – 0.7220 ▲

AUD/EUR: 0.6010 – 0.6130 ▼

GBP/AUD: 1.7780 – 1.8220 ▲

AUD/NZD: 1.0630 – 1.0750 ▼

AUD/CAD: 0.9480 – 0.9620 ▲


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New week brings new lows to US dollar

OFX Daily Market News

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USD – United States Dollar

The dollar is down today against the euro, the Great British Pound, the Canadian dollar and the Australian dollar against the backdrop of COVID-19 and China-US trade tensions.

EUR/USD continued its drive higher during the Asian session, breaking above 1.17 for the first time since September 2018. For now, we expect the EUR/USD pair to continue to climb where the 1.18 handle looks to be a possible target this week.

This week, Federal Reserve Chairman Jerome Powell will hold a press conference after the Fed’s two-day meeting. So far, the market expects rates to be near zero through 2022. Of course, any deviation from this extreme expectation would be a surprise on the ‘hawkish side’ and will bring support to the USD.

Key Movers

GBP/USD opened Monday morning on the rise again, peaking to 1.2846 during the Asian session. The pound’s rally will be watched with caution though as Brexit talks stalled last week over the chances of securing a free trade agreement, with Brussels deeming it “unlikely”, but London holding out hope one could be reached in September. This mixed with other euro positive news has prevented GBP/EUR moving in a similar direction to GBP/USD, the pair has fallen from last week’s high of 1.1102 down to 1.0950 where we currently trade at the time of writing.

The Australian Dollar finished the week above 70 US cents for the first time this year and hit 15-month highs against the Greenback. The pair finally pushed through the psychological 70 US cent resistance level as testing on multiple occasions since June. It was multiple fiscal policy approvals by both the Australian Government and European Union leaders providing the catalyst for the local currency to hit highs of 0.7183 on Wednesday evening.

Expected Ranges

USD/CAD: 1.337 – 1.342 ▼

USD/AUD: 1.398 – 1.410 ▼

GBP/USD: 1.278 – 1.29 ▼

EUR/USD: 1.164 – 1.178 ▼


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Political tensions weigh on the Australian dollar

OFX Daily Market News

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AUD – Australian Dollar

The Australian Dollar finished the week above 70 US cents for the first time this year and hit 15-month highs against the Greenback. The pair finally pushed through the psychological 70 US cent resistance level as testing on multiple occasions since June. It was multiple fiscal policy approvals by both the Australian Government and European Union leaders providing the catalyst for the local currency to hit highs of 0.7183 on Wednesday evening.

Given the speed of the rally, it was inevitable that some profit taking took place into the weekend, falling further following the news that China ordered the US to shut its consulate in Chengdu as tensions between the two countries flare up. Risk sentiment declined sending the AUD/USD to an intraday low of 0.7064 before closing the week in positive fashion at 0.7105.

Investors look this week towards the latest inflation print for the second quarter of 2020 on Wednesday. It is expected that we see a significant drop of approximately 2% and the biggest fall since records began in 1947. Free childcare as part of the governments stimulus measures up until July is likely to reduce the number by 1.1% alone. The record number is likely to keep interest rates set by the Reserve Bank of Australia on hold till at least 2022.

The Australian dollar opens this morning 0.7090. We expect support levels to hold on moves approaching 70 US cents, while any upward push will likely meet resistance at 0.7160

Key Movers

The US Dollar continued its dive this week, descending another 0.5% on Friday and nearly 2% on the week as investors flocked to the Japanese Yen on news that tensions had once again increased between the United States and China. Both sides ordered closures of consulates in their respective currencies sparking a sell off for the worlds most traded currency. The US Dollar Index (DXY) which measures a basket of currencies against the Greenback fell from 96.01 on the Monday open to 94.35 on the weekly close.

The Euro soared to a 21-month high this week as it was bolstered by the announcement by EU leaders that they had reached agreeable terms to its €750 billion recovery fund to support implications of COVID-19 on the economy. Eventual highs were seen on the EUR/USD cross of 1.1658 following a number of positive Manufacturing and Services PMI numbers from both France and Germany. The single unit currency eventually gained 2% on the week.

As we look to this week the headline news will be the release of the latest Federal Reserve Bank interest rate decision where it is widely expected rates will remain at record lows. More importantly it is likely that market participants will be eager to see the release of the FOMC statement where it is expected the Fed will take more of a dovish tone given the economic struggles at present in the United States and globally.

Expected Ranges

AUD/USD: 0.7040 – 0.7160 ▼

GBP/AUD: 1.7720 – 1.8100 ▲

AUD/NZD: 1.0650 – 1.0750 ▼

AUD/EUR: 0.6060 – 0.6140 ▼

AUD/CAD: 0.9480 – 0.9600 ▲


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The Greenback falls and touches the lowest level since January.

OFX Daily Market News

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USD – United States Dollar

The Greenback falls to the lowest level since January, despite the risk aversion yesterday and today. The US dollar decreased to a more than six-month low as momentum picked up, while the Japanese Yen increased against all its major peers. The US dollar was already on the back foot, following the Euro, which got a boost from the European Union’s deal on the 750-billion-Euro ($871 billion “USD”) economic recovery fund.

Key Movers

Despite yesterday’s risk aversion, the Canadian dollar was a good performer. The Loonie has not entirely enjoyed the commodity currency rally over the last few weeks. However, yesterday, it rallied versus the Aussie dollar by +0.63% and the Kiwi dollar by +0.52%. It even outperformed the US dollar yesterday by a meager 0.04%, due to the extremely weak price action of the Greenback. It is important to mention that it is atypical to have the Loonie stronger than the US dollar in a risk off environment such as yesterday.

Market participants have been very optimistic over the last few days about another US fiscal stimulus, but the US and China spat continues to weigh in the markets. This morning, there are concerns that rising U.S.-China tensions will hamper recovery efforts. China ordered the closure of the U.S. consulate in Chengdu in retaliation for the U.S. demanding their Houston consulate be closed.

The Mexican peso strengthened for the first time in three days following a falling U.S. dollar, and despite May output data confirming a worse-than-expected recession in Mexico. The May economic activity index (IGAE) collapsed 22.73% y/y, more than the consensus estimate of a 20.30% contraction and the economy shrank 2.62% on a month-over-month basis vs. expectations of a 0.98% drop. The USD/JPY fell 1.0% to 105.81, setting a fresh four-month low at 105.76, and the EUR/USD pair is up 0.3% to 1.1624 and it is trading at its highest level since September 2018 and it is on track for its fifth straight weekly gain.

Expected Ranges

USD/CAD: 1.3400 – 1.3464 ▼

EUR/USD: 1.1569 – 1.1700 ▲

GBP/USD: 1.2725 – 1.2800 ▲

AUD/USD: 0.7052 – 0.7101 ▼

NZD/USD: 0.6600 – 0.6637 ▼


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Risk appetite falters, dragging AUD off new highs

OFX Daily Market News

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AUD – Australian Dollar

Risk appetite faltered through trade on Thursday and with that the AUD upturn. Having touched intraday highs at 0.7162 the AUD was forced lower overnight, dragged downward by a push toward haven assets as investors balked following a surprise increase in US jobless claims. Markets were anticipating new unemployment claims would remain steady at 1.3 million and instead they rose to over 1.4 million, disrupting the trend of improving labour market data and highlighting a grim outlook moving through the latter half of the year. The AUD slipped back toward 0.71 US cents where it found some support and has since bounced off breaks below this new marker. A consolidated dip below 0.7090 could see a broader unwind of the week’s earlier gains.

Risk aversion continues to drive direction, as investor’s demand for growth-led and commodity driven currencies oscillates between broader support and resistance handles. Having broken above 0.70/0.7030, we expect the AUD to face headwinds on moves beyond 0.7160 and approaching 0.72. Despite this weeks risk-on move there is still a great deal of uncertainty plaguing financial markets and as risk demand continues to moderate, upward forays require broader fundamental support if they are to hold with any real conviction.

Attentions today turn to European manufacturing and services PMI as key markers of improving economic health, while COVID-19 headlines and US Fiscal support debate dominate the risk agenda.

Key Movers

Despite gains against commodity currencies and a push to haven assets, the US dollar index fell through trade on Thursday as the euro continued its upturn, while the JPY and CHF outperformed. The single currency pushed back above 1.16, marking fresh intraday highs at 1.1625, its highest level since October 2018. Investors are moving to price in a quicker European recovery as the US remains mired in the depths of the COVID-19 pandemic and Congress continues to drag its heels in delivering extended stimulus support. With conviction behind the move away from the dollar growing, there is scope to suggest the euro upturn will continue, with broader risk aversion the primary threat to the current upward shift. If a risk-off mood takes hold of equities and key indexes begin to falter then we would expect a sudden push back toward the world’s base currency.

The Great British pound struggled again as talks with key EU officials ended with little progress made. Negotiations will continue next week, but there is little hope of a deal being reached in the near term, with both sides at loggerheads. With a hard Brexit firming as a more likely scenario, we expect sterling will continue to struggle with nothing but an 11th hour deal to save it.

Expected Ranges

AUD/USD: 0.6980 – 0.7200 ▼

AUD/EUR: 0.6080 – 0.6220 ▼

GBP/AUD: 1.7720 – 1.8180 ▲

AUD/NZD: 1.0630 – 1.0730 ▼

AUD/CAD: 0.9490 – 0.9620 ▼


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US dollar continues to fall

OFX Daily Market News

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USD – United States Dollar

The US dollar reached new two-year lows against one of its major trading partners yesterday after the European Union finalized a recovery fund.

The euro pushed through 1.16, touching intraday highs at 1.1601 before edging lower into this morning’s training. 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.

Key Movers

The Great British pound 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.

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 1.41 as a sustained risk on mood continues to steer direction. Having touched intraday highs at 1.409 the AUD edged lower into this morning’s open slipping back below 1.396.

Expected Ranges

USD/CAD: 1.337 – 1.342 ▼

GBP/USD: 1.267 – 1.275 ▼

EUR/USD: 1.154 – 1.162 ▼

USD/AUD: 1.396 – 1.409 ▲


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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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AUD storms higher as EU leaders spur risk demand

OFX Daily Market News

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AUD – Australian Dollar

The Australian Dollar surged higher through trade on Tuesday, triggered by broad based US weakness and an uptick in risk demand following key fiscal policy announcements. Equities and risk sensitive currency lurched upward after EU leaders finally found an agreeable medium and announced details of its 750 billion Euro recovery fund. After weeks of back and forth the agreement is a crucial step forward in the European experiment, adding a much-needed fiscal injection to southern states devastated by the coronavirus. The Euro lead currencies higher forcing the USD sharply lower and allowing the AUD to push through resistance at 0.70/0.730, extending gains through 0.71 US cents to touch intraday highs at 0.7140, its highest level since May 2019. Added support came after Scott Morrison and Treasurer Josh Frydenberg announced the Job Keeper and Job Seeker programs will continue beyond September. Many analysts had feared a sharp correction in domestic economic performance once fiscal supports were removed. The extension affords small businesses and employees more time in bouncing back from the worst economic shock in 30 years.

Having waxed lyrical for weeks now about where a possible break may come from the move overnight opens the door for another risk on run. Markets continue to favour aggressive and extended fiscal support packages while ignoring the sustained run of negative coronavirus headlines. With hopes for a vaccine improving following recent clinical trials and governments amping up fiscal support efforts there is scope for further risk led upside.

Key Movers

The Euro led majors higher through trade on Tuesday following the announcement EU leaders had reached an agreement surrounding the distribution of the 750 billion Euro recovery fund. Power brokers Germany and France have been pushing the Frugal Northern States to agree the planned loan and grant platform and finally reach an agreeable medium with 390 billion to be issued as debt free grants and 360 billion as low interest loans. Italy, one of the worst hit by COVID-19 is set to receive over 200 billion, with 82b issued as grants and 127b in loans. The Recovery Fund is a huge step forward in a united EU and euro zone and the first step in collective debt obligations. The Euro pushed through 1.15 touching intraday highs at 1.1540 and marking its highest level since Q1 20119.

The US dollar fell across the board Tuesday as investors chased the Euro higher and sought risk currencies as optimism for a broader global economic recovery grew in the wake of the EU recovery fund announcement. The recovery fund plan puts in stark contrast the level of fiscal support issued in the US. The worst hit by COVID-19 congress has been slow to react to fiscal stimulus needs, weighed down by partisan demands as democrats and republican quibble over the best method for distributing support. While coronavirus numbers continue to rise lawmakers will sit to discuss details of a 1 trillion dollar package designed to replace the existing unemployment benefit scheme set to expire in August. With Republican leader Mitch McConnell said to Favour a direct cash injection with a new round of Cheques delivered to US households we will be closely watching the Hill through the coming days to better understand the extent of government support moving forward.

Expected Ranges

AUD/USD: 0.6930 – 0.7190 ▲

AUD/EUR: 0.6050 – 0.6230 ▲

GBP/AUD: 1.7720 – 1.8180 ▼

AUD/NZD: 1.0580 – 1.0780 ▲

AUD/CAD: 0.9430 – 0.9650 ▲


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Dollar falls as EU package approved

OFX Daily Market News

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USD – United States Dollar

The US dollar touched a four-month low against the euro yesterday after European Union leaders agreed on a 750-billion recovery fund.

The euro jumped above 1.1450 yesterday and continued its rise at the opening of trading today. EU leaders convened their four-day summit and agreed to distribute 390 billion of the 750 billion proposed recovery fund as grants to the worst hit member states while the remaining 360 billion will be parceled into low interest rate loans. The proposed agreement is a huge step forward in a united Europe and bolstered markets hopes the EU will continue to be proactive in tackling the problems raised by the COVID-19 crisis.

Meanwhile back in the US, Democrats and Republicans continued debating a $1 trillion-dollar economic relief package. Further delays of the relief package may add to the safe-haven bids on the dollar.

Key Movers

The British pound staged a strong relief rally against the Euro, U.S. Dollar and other major currencies on Monday reversing some of last week’s sell-off. GBP/EUR rallied by 0.75% to push above the 1.10 handle. GBP/USD pushed higher by 0.5% to break through 1.26 and then trade towards 1.27. There were no obvious signs as to why Sterling rallied yesterday, more than likely it was repositioning in the markets before another round of Brexit negotiations this week.

The Australian dollar crept back above 0.70 US cents through trade on Monday, buoyed by an uptick in risk appetite. Investors chased risk assets higher following reports further COVID-19 vaccine trials showed promising results. AstraZeneca, in partnership with Oxford University, released results of trials that covered over 1,000 patients all of whom generated antibodies to the virus as well as T-cells which seek out and kill already infected cells. With no serious side-effects reported researchers will move to the next stage of clinical trials, upsizing the number of participants in the hope of having a finished product ready for delivery to key healthcare workers and those most vulnerable to the disease by years end. Having pushed back through 0.70 the AUD touched intraday highs at 0.7020 before leveling out and trading sideways into this morning’s open.

Expected Ranges

USD/CAD: 1.344 – 1.353 ▼

USD/AUD: 1.405 – 1.427 ▼

EUR/USD: 1.142 – 1.149 ▼


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AUD fails to significantly extend upturn as risk sentiment begins to moderate

OFX Daily Market News

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AUD – Australian Dollar

The Australian dollar crept back above 0.70 US cents through trade on Monday, buoyed by an uptick in risk appetite. Investors chased risk assets higher following reports further COVID-19 vaccine trials showed promising results. AstraZenica, in partnership with Oxford University, released results of trials that covered over 1,000 patients all of whom generated antibodies to the virus as well as T-cells which seek out and kill already infected cells. With no serious side-effects reported researchers will move to the next stage of clinical trials, upsizing the number of participants in the hope of having a finished product ready for delivery to key healthcare workers and those most vulnerable to the disease by years end. Having pushed back through 0.70 the AUD touched intraday highs at 0.7020 before leveling out and trading sideways into this morning’s open.

Attentions remain with the race for a COVID-19 vaccine as risk demand continues to steer direction. With investors largely ignoring the slew of negative data points and dire headlines any sign a vaccine will be ready sooner than first expected will help drive the risk on tone and support a higher AUD. That said, while the dollar has edged higher through the last 2 weeks the AUD has struggled to extend gains beyond 0.7020 with investors reluctant to extend gains amid heightened uncertainty. Current rallies are not supported by the same level of conviction as the rally of April and May and as risk sentiment moderates the threat of a slower economic recovery amid renewed restrictions across Victoria and NSW could prompt a correction leading through Q3 ad Q4.

Key Movers

The USD edged lower through trade on Monday amid a backdrop of optimism driven by positive COVID-19 vaccine trials and a resurgent Euro. The Euro touched four-month highs, jumping above 1.1450 after EU leaders agreed on distributing 390 billion of the 750 billion proposed recovery fund as grants to the worst hit member states while the remaining 360 billion will be parceled into low interest rate loans. The proposed agreement is a huge step forward in a united Europe and bolstered markets hopes the EU will continue to be proactive in tackling the problems raised by the COVID-19 crisis. Having touched intraday highs at 1.1467 the single currency opens marginally lower at 1.1444.

With little of note on the macroeconomic docket this week, attentions remain with fiscal support plans and COVID-19 headlines. Discussions between democrats and republicans regarding a proposed 1 trillion dollar economic relief bill continue through the week with delays possibly adding to safe-haven bids on the dollar.

Expected Ranges

AUD/USD: 0.6930 – 0.7030 ▲

AUD/EUR: 0.6080 – 0.6170 ▲

GBP/AUD: 1.7880 – 1.8120 ▲

AUD/NZD: 1.0520 – 1.0620 ▼

AUD/CAD: 0.9450 – 0.9530 ▼


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