Australian Dollar vulnerable as PM shuts down non-essential services

OFX Daily Market News

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AUD – Australian Dollar

With fear and panic all over the markets last week the Australian Dollar had a wild week moving down almost 8% against the Greenback. Thursday alone saw trading within a 4 ½ cent range on the day driving the AUD/USD volatility index to its highest levels since 2008. Having opened on Friday at 0.5740, the pair touched an intraday low of 0.5663 before gaining some ground during the U.S session to touch an eventual high of 0.5985. The catalyst was the Fed’s decision to expand the currency swap line to nine more countries which helped ease market concerns about tightening liquidity and triggered some USD selling. Unfortunately, the move was short-lived as worries about the economic fallout from the coronavirus pandemic extended some support to the Greenback’s status as the global reserve currency.

On top of the initial the federal government initial $17.6 billion package announced on 12 March, the government yesterday announced further stimulus, adding $66 billion in new measures in an effort to help businesses survive the crisis.

The AUD/USD opens this morning at 0.5806, volatility is likely to continue until we some light at the end of a tunnel with the infection rate reducing or a vaccination available earlier than 2021. The RBA governor Lowe also responded to a question about intervention in the FX markets and said it wasn’t out of the question and would be possible if the markets were dysfunctional like the GFC. Markets will keep monitoring the daily updates of global news on coronavirus cases, and we can expect to see further risk to the downside.

Key Movers

The USD Index traded at a 3-year high last week with the greenback benefitting from above-average interest as huge deleveraging is leading to a run into the USD and the currency is in high demand. In times of trouble, companies, banks and investors want to hold dollars, it’s the world’s reserve currency and considered the safest. Investors have been selling financial assets all over the world which has been fueling demand for the USD and sending other currencies lower, much lower. By the Fed expanding its swap lines and adding lines to more central banks so that whatever institutions need Dollar funding can have access to it is aiming to alleviate pressure on currency markets. The goal is to ease the panic for dollars and allow foreign-exchange markets to keep operating normally.

Global markets also shifted lower, the S&P500 has lost over 30% in the past month, oil and commodity prices were under further pressure as too were bond yields. In the UK, a further GBP 30bn was announced as a stimulus to support the employed, self-employed and companies that would feel the pinch.

Expected Ranges

AUD/USD: 0.5510 – 0.5980 ▼

AUD/EUR: 0.5000 – 0.5680 ▼

GBP/AUD: 1.9810 – 20820 ▲

AUD/NZD: 0.9960 – 1.0320 ▲

AUD/CAD: 0.8050 – 0.8700 ▼


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The Greenback falls after central banks around the world improve liquidity in a coordinated effort.

OFX Daily Market News

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USD – United States Dollar

The Fed continues to improve U.S. dollar liquidity by providing U.S. dollar funding. At the same time, the Fed announced coordinated central bank line enhancements; these central banks have agreed to increase the frequency of 7-day maturity operations from weekly to daily. These daily operations will commence on Monday, March 23, 2020, and will continue at least through the end of April.

The coordinated central bank efforts between the Fed and 9 central banks, including the RBA ($60bn) and RBNZ ($30bn), is one factor for somewhat less volatile FX markets overall, and a modestly softer U.S. dollar. Other central banks included in the swap line facilities are Banco Central do Brasil, Danmarks Nationalbank, Bank of Korea, the Banco de Mexico, Norges Bank, Monetary Authority of Singapore, and Sveriges Riksbank.

This Covid-19 virus lockdown might mean a hard stop for the U.S. economy. Economic growth in the second quarter might bring a steep contraction in U.S. history, and probably surpass the worst period of the financial crisis in 2008.

Key Movers

The USD/CAD is falling 1.61 percent after crude oil rallied and global stock market seems forming a bottom, which does not mean economic news will improve for the Canadian economy, which might start to show very weak numbers in the following weeks after the COVID-17 virus created a global health crisis.

Crude oil rallied as president Trump got involved into the price war between Saudi Arabia and Russia. At the same time Texas regulator proposed his state could coordinate output cuts with the producers.

A few minutes ago Canada January retail number came in at 0.4 percent versus 0.3 percent expected, month to month. However e-commerce sales were C$ 1.66 billion in January up 9.8 percent from a year earlier and representing 3.7 percent of total retail sales.

Expected Ranges

USD/CAD: 1.4150 – 1.4348 ▼

EUR/CAD: 1.5157 – 1.5316 ▼

GBP/CAD: 1.6550 – 1.6999 ▲

AUD/CAD: 0.8245 – 0.8448 ▲

NZD/CAD: 0.8020 – 0.8294 ▼


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AUD bounces of lows in one of the most volatile trading days on record

OFX Daily Market News

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AUD – Australian Dollar

The Australian dollar enjoyed a tumultuous and volatile ride through trade on Thursday, crashing to fresh 17-year lows at 0.5510 during the domestic session before surging higher overnight. The daily high low range was the fourth largest in over 30 years with an 8% gap between the bottom and top of the daily chart. Markets began to demonstrate some semblance of stability as investors appeared to stop and take a breath, stepping back from the panic that has enveloped the AUD through the last fortnight. The RBA, ECB and Bank of England all announced considerable Quantitative Easing platforms, while the Federal Reserve created a fund specifically designed to ease the current liquidity strains. It seems the glut of global fiscal stimulus and the coordinated monetary policy response is finally beginning to bite.

Having touched intraday highs at 0.5927 the AUD opens this morning at 0.5740 as attentions remain squarely affixed on global risk trends as markets dismiss macroeconomic data sets. Having plunged over 10 cents in the last fortnight the recent moves have clearly overshot fair value estimates and as liquidity pressures ease and panic subsides there is certainly scope for the AUD to correct higher. The overnight bounce could mark the beginning of the correction, however as the spread of the coronavirus around the global continues at pace we can reasonably expect the AUD will face downside risks. Watch resistance on move approaching 0.5930 and 0.60 with support at 0.54 and 0.5260.

Key Movers

The Dollar index gained through trade on Thursday despite a mixed performance against major counterparts. Having pared recent gains against the AUD, CAD and NZD the worlds base currency advanced against the euro and Japanese yen as the ECB unveiled extensive QE support and risk sentiment forced the JPY lower. The ECB announced it would step up its bond buying program, committing to purchase an additional 80 billion euro per month into the end of the year. The 750-billion-euro package signals the fastest rate of bond buying in the ECB’s history, outstripping the measures adopted in the wake of the GFC. Falling through 1.09 the euro plunged to intraday lows at 1.0662.

Attentions remain squarely affixed to broader risk trends and with COVID-19 continuing its rapid spread across the world with a large uptick in new cases reported in the US on Thursday, we can reasonably expect demand for risk will remain subdued. However, the improvement in risk appetite on Thursday suggests a tentative stabilisation across currency markets could be at hand. Watch for stability across bond markets and a sustained recovery across equities as signals the recent overshot may begin to unwind.

Expected Ranges

AUD/USD: 0.5510 – 0.5980 ▲

AUD/EUR: 0.5050 – 0.5650 ▲

GBP/AUD: 1.9720 – 2.0720 ▼

AUD/NZD: 0.9980 – 1.0220 ▼

AUD/CAD: 0.8050 – 0.8650 ▲


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Aussie collapse continues as anxiety continues to fuel liquidity push

OFX Daily Market News

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AUD – Australian Dollar

The Australian dollar collapse continued through trade on Wednesday, extending the shift below 0.60 US cents and touching intraday lows at 0.5702. Equities plunged lower, while oil fell sharply again as the risk off mood intensified forcing investors toward haven assets and driving the USD higher. A broader push for liquidity has prompted a strong US dollar resurgence and driven the AUD sharply lower through the last fortnight. Investors are panicking and seeking shelter in world’s base currency, as equity and commodity prices tumble. While, central banks around the world have attempted to shore up money markets and inject record levels of liquidity, there is a real fear Fed swap lines won’t extend far enough to fill the void created in this unprecedented vacuum.

Having touched 17 year lows the AUD remains vulnerable to further downside risk as fear breads fear and markets seemingly loose all rational. With little in the way of traditional support or resistance handles guiding direction and volatility rising by the day questions as to where the bottom may be become increasingly difficult to answer.

Attentions today turn to the RBA, as the central bank is tipped to issue an out of cycle rate cut and announce QE measures to ensure funding remains available to households and businesses, while employment data for February could provide the first real insight into human economic impact of this health crisis as the unemployment rate is tipped to surge toward 10% in the coming months.

Key Movers

The US Dollar enjoyed strong gains through trade on Wednesday, surging higher as liquidity panic flattens risk appetite and prompts investors to buy back USD. Bloomberg’s dollar index jumped sharply, fueled by heavy losses across key major counterparts. The Great British Pound plunged through 1.20, loosing over 5% and touching intraday lows at 1.1526, while the Euro drove through 1.10, bottoming out at 1.0810 before edging marginally higher into this morning’s open.

Panic across financial markets has prompted a run on liquidity and investors are scrambling to buy back into the world’s base currency, liquidating all other asset classes for cash as the global economy grinds to a halt. The US dollar has been the main benefactor of such moves rallying 8% in the past 2 weeks as funding and cash dry up and investors looked to the world’s base currency for stability amid the glut of uncertainty. As market and investor anxiety continues to build, we anticipate recent runs will be extended as rational trading patterns fall by the wayside and fear governs broader market direction.

Expected Ranges

AUD/USD: 0.5510 – 0.5980 ▼

AUD/EUR: 0.5080 – 0.5420 ▼

GBP/AUD: 1.9820 – 2.0280 ▼

AUD/NZD: 0.9920 – 1.0250 ▼

AUD/CAD: 0.8280 – 0.8520 ▼


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The Greenback surges to a three-year high as market participants struggle to get access to U.S. dollars.

OFX Daily Market News

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USD – United States Dollar

The U.S dollar is increasing quickly at this moment because every crisis boosts demand for cash, and the U.S. dollar is accepted all around the world. Global market participants demand U.S. dollars to keep businesses running. The Fed in the U.S. already did its job by pumping more liquidity into the money markets, so there is less pressure on money markets for funding right now.

The U.S dollar extends gains, increasing against the Euro by 0.8 percent. The EUR/USD pair trades at 1.0885 at the time of this writing. The U.S. dollar continued its advance, pushing broad measures of its value to three-year highs, as global equity futures pointed to losses. The British Pound fell to the lowest since 1985.

The U.S. dollar funding issues were eased after the Fed unleashed two emergency lending programs on Tuesday. Market participants around the world continue accumulating the Greenback amid increasing concerns over bank fund costs in a sharp economic downturn. For instance, European banks took $112 billion from the Fed, the most since the global financial crisis in 2008. There was an effort with the ECB to keep U.S. dollars flowing in European economies (outside of the U.S.) and support international funding markets. This financial help followed the cut of the Fed Funds rate to a range of 0 to 0.25 percent. This week’s series of repo injections and increased liquidity support inter-bank lending markets in North American money markets.

Key Movers

Bank of Canada Governor Stephen Poloz will join Finance Minister Bill Morneau at a press conference at 11:15 a.m. EST. Morneau is expected to release a stimulus package of about 1 percent of GDP. Meanwhile, Poloz already announced an emergency half-percentage-point cut to the bank’s benchmark interest rate last Friday. The USD/CAD pair is already trading at 1.4462 at this moment (and it is increasing quickly). If it reaches 1.4691, it would reach a 17-year high (the weakest level for the Loonie in 17 years).

The bad news for the Loonie doesn’t stop there; the Loonie is also tumbling following lower crude oil prices and the weakest Canadian equity market in years. However, Canadian Prime Minister Justin Trudeau is expected to unveil a fiscal stimulus package worth 1 percent of GDP to help the Canadian economy avoid an imminent economic slowdown.

Expected Ranges

USD/CAD: 1.4332 – 1.4690 ▲

EUR/USD: 1.0778 – 1.0974 ▼

GBP/USD: 1.1634 – 1.1958 ▼

AUD/USD: 0.5825 – 0.6077 ▼

NZD/USD: 0.5655 – 0.5865 ▼


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Australian Dollar breaks below 0.60 liquidity shocks bolster demand for USD

OFX Daily Market News

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AUD – Australian Dollar

The Australian Dollar crashed through 0.60 US cents in overnight trade on Tuesday, touching intraday lows at 0.5962. As market volatility increases and the spreading coronavirus forces more countries into lockdown demand for the AUD continues to evaporate. Having maintained a relatively tight range throughout the domestic session, bouncing been 0.6070 and 0.6140 the AUD tumbled overnight, breaking through support barriers and the psychological 0.60 handle as broad based US dollar strength only added further pain to the already downtrodden unit.

The Australian Dollar has plunged over 6 cents since March 8 and near 11 cents since January 1 as panic among investors and broader markets lingers. With the RBA expected to announce QE measures on Thursday attentions remain squarely affixed to this unfolding health crisis and the global response. With global health officials suggesting the initial and immediate outbreak will persist for months to comes we expect the economic impact will intensify with adding mounting pressure on commodity and emerging market currencies.

Key Movers

The US dollar advanced against the majority of counterparts through trade on Tuesday, buoyed by an increased demand for liquidity as investors and corporate entities rush to sure up equity lines, while the risk of broader shutdowns dampens demand for risk. Despite moves from central banks across the world, funding markets continue to show signs of stress when sourcing the worlds base currency, forcing investors away from commodity driven and emerging market assets. Having been driven lower in the back half of February the US dollar has since rebounded as global appetite for risk evaporates and widespread panic prompt’s investors to look for haven assets. Advancing some 5%+ since March 9th we expect the USD will remain well bid through the short term – medium term.

The Euro has relinquished nearly all its resent gains dipping back to 1.10 while the Great British Pound has plunged well below 1.30, testing supports at 1.20 having touched intraday lows at 1.2011.

Attentions remain squarely affixed to the enveloping health crisis with risk demand the primary driver across currency markets through the foreseeable future.

Expected Ranges

AUD/USD: 0.5810 – 0.6130 ▼

AUD/EUR: 0.5380 – 0.5520 ▼

GBP/AUD: 1.9890 – 2.0320 ▲

AUD/NZD: 0.9980 – 1.0180 ▼

AUD/CAD: 0.8390 – 0.8590 ▼


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Aussie slide continues as investors eye a break below 0.60 US cents

OFX Daily Market News

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AUD – Australian Dollar

The Australian dollar continued its march lower through trade on Monday, extending loses below 0.6150 and testing a break below 0.61, touching intraday lows at 0.6083. Wild fluctuations across currency and broader financial markets persisted as risk off plays continued to dominate direction and central banks scramble to prop up flailing economies. The Federal Reserve and RBNZ both slashed benchmark interest rates while the Bank of Japan doubled its ETF Quantitative Easing facility. These moves have amplified calls for the RBA to issue an out of cycle rate adjustment, doubling down on March’s 25 basis point reduction. Governor Lowe has suggested the RBA is prepared to introduce Quantitative Easing measures in a bid to stave off recession but at this point there is little idea of the timing of such a package. Traditionally the RBA has preferred to act within the bounds of its monthly monetary policy meetings but with April’s policy get-together still some three weeks away there seems little point in waiting, if relief can be delivered now and attentions turn to Thursday’s RBA Bulletin for any extended insight.

COVID-19 continues to dominate direction and with a global recession and inevitability we anticipate the AUD will come under sustained pressure through the foreseeable future. With health officials attempting to flatten the curve all reports suggest the virus will continue to proliferate well into 2020. With the economic impacts already being felt across key sectors of the economy, namely tourism and the arts, the wider reaching shock could force the AUD below 0.60 as existing handles for support continue to be knocked out.

Key Movers

Safe havens were the winners again through trade on Monday as extensive fiscal and monetary policy programs did little to ease broader market concerns and bolster appetite for risk. The Japanese yen jumped, while the CHF and Euro also gained against the USD following the Federal Reserve’s 75 basis point cut to interest rates. With the yield advantage eliminated throughout the last 3 weeks the USD has come under increasing downward pressure as investors scramble to correct net long positions. The dollar index fell a further 0.75% yet ongoing downside may be limited as liquidity pressures and the ongoing risk off mood push investors toward the world’s base currency. With little demand for commodity driven assets and emerging market currencies the USD remains a popular safe haven play propping up what would otherwise be an overtly aggressive downward correction.

Coronavirus fears continue to dominate direction and we expect the USD, JPY, Euro and CHF to remain well bid through the short term as investors scramble to find some certainty and stability.

Expected Ranges

AUD/USD: 0.6010 – 0.6250 ▼

AUD/EUR: 0.5390 – 0.5600 ▼

GBP/AUD: 1.9650 – 2.0270 ▲

AUD/NZD: 0.9980 – 1.0260 ▼

AUD/CAD: 0.8400 – 0.8600 ▲


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The Fed made a 1 percent emergency rate cut to lower U.S. dollar funding pressures and calm the financial markets.

OFX Daily Market News

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USD – United States Dollar

The Federal Reserve cut rates again by a further 100 basis points and restarted its large quantitative easing package by purchasing $700 bn worth of US treasuries and mortgage backed securities. To stress how critical this is, the Fed decided that it couldn’t wait until Wednesday when they were due to meet and the central bank have never cut rates by such an extent in one go, not even during the GFC. There could undoubtedly be some relief in the markets mood.

In a Bretton Woods style move on Sunday there was a coordinated effort globally with the ECB, Bank of England, Bank of Japan, SNB and Bank of Canada all throwing the kitchen sink at the coronavirus by increasing liquidity for the US dollar with a host of these central banks also cutting their own rates. The Bank of England is also expected to cut rates to 0.1% later this month now.

President Donald Trump has officially declared a national emergency over the coronavirus outbreak in the U.S. He said the U.S. would free up $US 50 billion to deal with the pandemic and he also invoked the Stafford Act to allow for more federal aid for states and municipalities. He added, “I’m urging every state to open emergency operations centres … we’ll remove or eliminate every obstacle necessary to deliver our people the care that they need and that they’re entitled to … no resource will be spared, nothing whatsoever.” This marks a symbolic turning point for the president, who has repeatedly compared the coronavirus to the seasonal flu.

Key Movers

The Bank of Canada cut its overnight rate by 50 basis points again at an unscheduled meeting last Friday. This follows a half-point cut at a scheduled meeting on March 4. The extra half-point cut was expected to come at the April 15 meeting. A sizable economic contraction is expected in the second quarter following the fall of crude oil price on top of escalating virus-related sentiment impacts. The BoC said that this cut is a “proactive measure” to fight the pandemic risks and the recent sharp drop in oil prices, which are set to impact negatively the Canadian economy. The BoC’s proactivity increases the chances that it will take the rate to 0.50 or even 0.25 percent this year.

Expected Ranges

USD/CAD: 1.3826 – 1.4000 ▲

EUR/USD: 1.1111 – 1.1219 ▲

GBP/USD: 1.2230 – 1.2459 ▼

AUD/USD: 0.6100 – 0.6220 ▼

NZD/USD: 0.6000 – 0.6063 ▼


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Aussie hits 17 year low and remains under pressure

OFX Daily Market News

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AUD – Australian Dollar

The Australian Dollar suffered another eye-watering day of volatility on Friday with the Aussie hitting a fresh 17-year low against the greenback. Opening this morning initially at 0.6183, the Aussie again found itself wantonly sold-off by nearly 1% on Friday. The turn-around was swift however with two emergency rate cuts from NZ and the US sending the Aussie higher back towards 0.63.

The Aussie fell primarily during the American session on Friday as the Greenback rallied significantly after President Trump appeared to be more assertive in the US reaction to COVID-19. President Trump announced a national state of emergency as well as a number of measures to support the economy. Markets immediately reacted to the news with the S&P500 rallying and bond markets also jumping. Adding to the strengthening US Dollar was a liquidity squeeze on the Greenback. Ultimately the US Dollar Index rose an impressive 3.3% for the week as the Greenback again became a source of safety for the market. Unfortunately for the Aussie however, a commodity backed currency with close ties to China was not the first option for investors on Friday.

Moving into a new week, global markets continue to be volatile with emergency central bank meetings and the escalating COVID-19 pandemic taking center stage this week.

Key Movers

The COVID-19 Pandemic continues to roil global markets with significant swings in all financial markets. From a foreign exchange perspective, nearly all currencies oscillated throughout last week. Adding fuel to the fire was a number of emergency central bank cuts with the US Fed dropping the interest rate to 0 and RBNZ dropping theirs to 0.25. The Bank of Canada and Norse Bank also dropped their rate in emergency meetings by 0.5.

In terms of the largest moves in foreign exchange, both Canada and Norway benefited from the bounce back in Oil prices with sharp rises on Friday while the Japanese Yen continues to struggle and posted a 3.3% decline.

Expected Ranges

AUD/CAD: 0.8495 – 0.8685 ▼

AUD/EUR: 0.5493 – 0.5686 ▼

GBP/AUD: 1.9765 – 1.9995 ▲

AUD/NZD: 1.0145 – 1.0325 ▼

AUD/USD: 0.6175 – 0.6310 ▼


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US Equities in Bear Market Territory, U.S. Dollar Strong Against the G10 Currencies

OFX Daily Market News

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USD – United States Dollar

U.S. stock markets suffered their worst falls since 1987 yesterday, dropping around 10 percent, leading to U.S. markets being temporarily being closed in New York for the second time this week. Soon after the bell rang in New York, the market fell by 7 percent, triggering the “circuit breaker,” leading to a 15-minute pause in trading. It extended its losses; however, it didn’t hit the 13 percent drop, which would have signaled another 15-minute break. European bourses didn’t suffer any better with both France and Germany’s main index’s ending more than 12 percent lower. Trump’s flight embargo saw stocks in travel companies and airlines decline sharply. The move was not aided by the European Central Bank decision to keep rates unchanged despite promising to extend its Quantitative Easing program. Many market participants were expecting a cut in either its primary financing or its deposit rate to stimulate the economy; however, with rates already so low, there is little wriggle room for the ECB to move.

Key Movers

Thankfully this morning some sort of calm appears to have been restored with China only reporting eight new cases of coronavirus overnight hopefully proving some sort of guide to how long this crisis will rumble on in the wider world. All Asian markets finished in the green and European stocks are all up too as the panic seen throughout the week eases. USD/JPY is up to 107.02

Expected Ranges

EUR/USD: 1.1097 – 1.1221 ▲

GBP/USD: 1.2454 – 1.2624 ▼

USD/CAD: 1.3781 – 1.3946 ▲

AUD/USD: 0.6265 – 0.6325 ▼

NZD/USD: 0.6106 – 0.6160 ▲


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