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AUD - Australian Dollar

The Australian dollar appeared poised to break back above 0.70 US cents through trade on Monday, following equities higher before a swift reversal in risk demand drove both the AUD and key equity indices lower. An increased appetite for risk helped push the AUD higher through out the domestic session with added support coming as the number of new COVID19 cases in Victoria fell. Testing resistance at 0.6990 the AUD’s upward momentum suggested a sustained surge in risk demand could see a break above 0.70. While the Nasdaq and ASX rallied the S&P 500 broke into positive territory for year before profit taking and a swift risk off move sent the AUD back below 0.6950.

The AUD remains range bound, entrenched within a narrowing band, shifting between 0.6930 and 0.6990. Volatility within narrowed ranges remains high as markets continue to battle expectations for a recovery and an ever-increasing uncertainty around the length and scale of the economic recovery. While there is hope the Victorian outbreak may have been controlled the number of new COVID19 cases around the world shows little signs of slowing. Florida alone reported 12 new cases through Monday while India battles to control the outbreak. With the global growth expectations waning risk demand rest solely with sustained and ongoing fiscal and monetary policy support. We expect the AUD will remain range bound through the short term battling to break outside broader ranges between 0.68 and 0.70.

Key Movers

The US dollar edged marginally lower when measured against a basket of key major counterparts. Optimism the pandemic’s resurgence in the US was reaching its peak continued through early trade on Monday as the rate of increase in new infections across key US hotspots slowed. Having drifted toward a one month low the dollar found support following reports California will re-impose strict lockdown measures, forcing the closure, of bars, restaurants, gyms, hair salons and other service providers in a bid to stem the spread of the virus in some of the hardest hit counties.

The Euro advanced through trade on Monday, up 0.4% and testing a break above 1.1350 having touched intraday highs at 1.1373. Optimism ahead of this weeks EU leaders summit helped bolster demand for the common currency as investors look to EU officials for further updates regarding the EU recovery fund. The current plan allows for 750 billion Euro’s to be distributed to the worst effected countries via a series of grants and loans. With the Netherlands, Denmark and Austria all questioning the issuance of grants and shared debt obligations investors will be keenly attuned to any amendments in the proposal and/or sings the current proposal may be derailed. Should EU leaders agree a package this week we could see an extended risk on move helping drive risk currencies higher and force haven assets lower.

Expected Ranges

AUD/USD: 0.6850 - 0.6990 ▼

AUD/EUR: 0.6080 - 0.6180 ▼

GBP/AUD: 1.7890 - 1.8250 ▼

AUD/NZD: 1.0550 - 1.0680 ▲

AUD/CAD: 0.9380 - 0.9490 ▼

AUD - Australian Dollar

The Australian Dollar is fractionally lower this morning against the US Dollar trading around 0.6950. The advance of the local currency seems to be stalling just ahead of a key resistance levels against the Greenback having failed to extend the weeks early uptick and push through 0.70 US cents last week. We anticipate the AUD will remain range bound through the short-term, bouncing between support and resistance handles as the ebb and flow of risk demands follows the shifting COVID-19 led narrative. The COVID-19 outbreak in Melbourne and the subsequent six-week lockdown imposed on the city will continue to be closely watched this week with Melbourne being a key economic hub for Australia and there will certainly be a hit to economic growth.

Looking ahead this week on the data front and on Tuesday we will see the release of the NAB Business Confidence followed by Westpac Consumer Sentiment on Wednesday. On Thursday all eyes will be on the employment release which is forecast to jump from 7.1% to 7.2%. From a technical perspective, the AUD/USD pair is currently trading at 0.6956. We continue to expect support to hold on moves approaching 0.6923 while now any upward push will likely meet resistance around 0.6992.

Key Movers

The dollar slipped on Friday on hopes of a potential vaccine for the coronavirus that outweighed concerns about the surge in infections in the United States and around the world. The main market-moving news on Friday was Gilead’s report on its phase three clinical trials of Remdesivir. Gilead said that the drug cut the death rate of those in its trials by 62%. Over the weekend it was reported the state of Florida set a new record with over 15,000 new COVID-19 cases. Coronavirus infections are rising in about 40 states. Over the last week the United States has broken global records by registering approximately 60,000 new cases a day for the last four days in a row. On the release front on Friday U.S. producer prices unexpectedly fell 0.2% in June, following a 0.4% rebound in May, as the economy battles depressed demand amid the COVID-19 pandemic.

Expected Ranges

AUD/USD: 0.6800 - 0.7000 ▼

AUD/EUR: 0.6120 - 0.6180 ▲

GBP/AUD: 1.7980 - 1.8220 ▲

AUD/NZD: 1.0550 - 1.0680 ▼

AUD/CAD: 0.9410 - 0.9480 ▲

AUD - Australian Dollar

The Australian dollar drifted lower through trade on Thursday, having failed to extend the weeks early uptick and push through 0.70 US cents. The AUD traded sideways for much of the domestic session, maintaining a 25 point range and bouncing between 0.6973 and 0.6996, before shifting back toward 0.6950 as risk appetite faltered. Markets shifted focus toward safe haven assets, following a ruling by the US supreme court that will allow New York prosecutors access to President Trump’s financial records. Equities and risk correlated currencies were forced lower in the minutes following the verdict as the possibility for further political instability added to the environment of uncertainty.

Risk continues to drive direction and while the record levels of fiscal and monetary policy support have helped foster a positive risk backdrop, the uptick in COVID-19 cases and added geopolitical uncertainty are weighing on upward risk-on moves. While we expect the record centralised support packages will continue to support the global economy and the AUD, an extension beyond 0.70 requires a renewed risk driven push. Having surged through April and May, broader optimism has stalled and ranges across currency markets have narrowed considerably. We anticipate the AUD will remain range bound through the short-term, bouncing between support and resistance handles as the ebb and flow of risk demands follows the shifting COVID-19 led narrative.

Key Movers

The US dollar advanced through trade on Thursday, bouncing off 4 week lows amid uncertainty across equity markets and a broader shift in risk demand. The S&P 500 drifted lower as risk appetite faltered following a surge in Coronavirus cases and a Supreme Court ruling that will allow prosecutors access to President Trump’s financial records. While the Supreme Court ruling adds further political uncertainty, the surge in new coronavirus infections is more immediately concerning. 60,000 new cases were reported on Wednesday with over 900 fatalities recorded, the biggest daily death rate since early June. With COVID-19 spreading across the US, hopes of a full scale re-opening are rapidly fading as States and Governors rush to re-impose social distancing restrictions in a bid to contain the spread and ease the burden on the healthcare system. The dollar index rallied three tenths of a percent and opens this morning back above 96.50 at 96.75.

The euro retreated through Thursday, giving up one month highs amid the broader risk off move. Having touched 1.1370 the combined currency retreated, moving back below 1.13 before finding support at 1.1280.

Attentions remain affixed to the broader risk narrative and with little of note on the macroeconomic docket we expect the ebb and flow of risk demand will continue to drive direction.

Expected Ranges

AUD/USD: 0.6800 - 0.7000 ▼

AUD/EUR: 0.6120 - 0.6180 ▲

GBP/AUD: 1.7980 - 1.8220 ▲

AUD/NZD: 1.0550 - 1.0680 ▼

AUD/CAD: 0.9410 - 0.9480 ▲

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 ▼

AUD - Australian Dollar

Tuesday’s offshore sessions saw a consolidation in global risk appetite as equity markets were lower and the safe haven USD was higher. This saw the Australian Dollar trade sideways, ranging between 0.6925 and 0.6878 throughout overnight trade. Given the escalating situation in Victoria, the AUD/NZD cross was forced lower, slipping from 1.0630 to 1.0609, opening up the door for a move below 1.06.

The news of 191 new COVID-19 cases in Victoria yesterday led to the announcement of a 6-week lockdown in metro Melbourne and a closure of the Victoria-NSW Border by the Victorian government. The local currency, which was approaching the key 0.7000 handle at Asian open, was sold off nearly 60 points on the news to trade closer to 0.6930. As expected, the RBA maintained their monetary policy stance yesterday, holding the cash rate at 0.25% and delivered nothing of impact to markets.

As we head into a very quiet day on the data release front, we’re expecting the local unit to continue to trade in line with global risk sentiment. Due to the unfolding situation in Victoria, risks are seemingly skewed to the downside with immediate support at 0.6930 looking vulnerable. On the topside, key resistance at 0.7000 is still a big obstacle.

Key Movers

Taking a global look at the overnight session which seemingly had it all, the USD index was 0.3% higher across the board as risk sentiment consolidated as US-China trade tensions simmered and the strength of the US economic recovery was questioned. News that US Secretary of State, Mike Pompeo was looking at banning Chinese social media app TikTok and concerned comments from Fed official Bostic about what the recent spike in COVID-19 cases meant for the economic recovery stifled risk sentiment globally.

The Euro under-performed, falling from 1.1310 to 1.1260 before recovering slightly. The GBP was the best performer on the day, rising 0.6% against the greenback to trade around 1.12560 ahead of this week's Brexit negotiations.

Expected Ranges

AUD/USD: 0.6900 - 0.7000 ▼

AUD/EUR: 0.6130 - 0.6180 ▲

GBP/AUD: 1.7890 - 1.8110 ▲

AUD/NZD: 1.0580 - 1.0640 ▼

AUD/CAD: 0.9390 - 0.9480 ▲

Australian Consumer Price Index for Q1/19 came in weaker than expected, falling well below the RBA’s 2-3% target range. The AUD dropped temporarily below the important 0.70 level but then managed to bounce back. The pace of inflation has weakened noticeably which is adding to the case for easier monetary policy. This is making the RBA meeting on the 7th May and RBA Statement on Monetary Policy on the 10th a lively event to keep a look out for.

Oil rallied on the news that the US would not renew its oil sanction waivers that allow countries to buy Iranian oil for 5 nations which included China, India, Japan, South Korea and Turkey. Currencies of oil importing nations such as INR and TRY suffered on the headline while currencies of exporting oil nations such as CAD and NOK strengthened. On Friday, Oil futures dropped 2.9% following mixed Headlines from Russia and US leaders.

The BoC left rates unchanged at 1.75% for the fourth time, as expected, maintaining its dovish tone as the economy faces a slowdown. Their GDP outlook for 2019 dropped to 1.2% from 1.7%, and to around 2% in 2020. USDCAD spiked to 1.3522 at the release of the headline. Governor Poloz afterwards emphasised patience and reiterated that the next move in rates is likely to be a hike than a cut, which help the USDSCAD fall back below the 1.35 handle.

Strong US data propelled the Greenback to increase +0.7% versus the Euro and the Loonie, +0.6% versus the Sterling, and +1.5% versus the Aussie dollar. US domestic GDP came in at 3.2%, when the expectation was 2.6%. Additional data showed that the number of Americans filing for unemployment benefits fell to its lowest level in almost 50 years. Furthermore, the Core Durable Goods Orders rose by the most in eight months in March, showing surprising strength. The USD Index lost some ground at the end of the week as market participants realised that 1.7% of the 3.2% GDP increase came from inventory accumulation and net exports (sparked by a big -3.7% drop in imports).

Japan’s Industrial production shrank at its fastest level since 2015, slipping 0.9% on the month for March as exports slumped. This is a leading indicator for GDP which probably shrank in the first quarter. Governor Haruhiko Kuroda launched a radical program to reflate prices nine years ago, however, the BOJ now projects that it won't accomplish its 2 percent inflation target at least through March 2022. The Japanese Yen was the best performer within the major currencies last week; it rallied 0.3 percent versus the US dollar and 1.8 percent versus the Aussie dollar.

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