AUD - Australian Dollar
Friday’s session saw the Australian Dollar fall from 0.6720 to 0.6662 against the US Dollar, representing its lowest level since the GFC. The AUD, which continues to trade as a proxy for Chinese and global growth, has been burdened by the ongoing Coronavirus situation as the number of confirmed cases continue to rise at a steady pace. Although we did have less dovish commentary from RBA governor Lowe last week, it was not enough to support the AUD as it remained firmly under the 0.67 handle. Lowe pointed to financial stability concerns as a core reason for the central bank’s reluctance to ease rates further this month.
Monday’s session is light on the data front as we expect the AUD to continue to trade on global risk sentiment and in particular, developments in the Coronavirus situation. Analysts will be looking to Chinese inflation and lending data for January as a gauge of how the Chinese economy was tracking before the virus outbreak. We also could see some spillover from the RBNZ cash rate decision on Wednesday, although they are expected to keep rates on hold. From a technical perspective, initial supports can be seen at 0.6662 with any moves lower expected to find further support around 0.6650. On the topside, resistance is expected on moves approaching 0.67 and 0.6724.
Market sentiment continues to deteriorate amid growing concerns around the Coronavirus epidemic gripping Asia. Although we did see some stronger than expected US employment data out of the worlds largest economy on Friday, we saw classic risk off flows as traders continued to brush aside economic data in favor of risk sentiment. US non-farm payrolls were much stronger than expected, coming in at 225K for the month whilst the unemployment rate continues to remain at historical lows.
Safer currencies rose on Friday with the JPY the best performer on the day, ranging between 1.954 and 110 against the USD. The USD index was also up on the day with the EUR falling 40 points from 1.0980 to 1.0942, representing a four-month low. In line with risk sentiment, commodity prices were soft as Crude fell 1.1%, copper 1.3% whilst gold rose 0.2%. With a slow start to the week on the data front, we’re expecting market pricing to continue to take its cues from the evolving coronavirus situation, with growth correlated currencies AUD and NZD to be particularly vulnerable to developments. Notable risk events later in the week are not only the RBNZ’s monetary policy statement on Wednesday but also UK Q4 GDP numbers due out Tuesday, testimony from Fed Chair Powell on Thursday and US CPI numbers due out on Friday.
0.6625 – 0.6724 ▼AUD/EUR:
0.6070 – 0.6110 ▼GBP/AUD:
1.9253 – 1.9351 ▲AUD/NZD:
1.0393 – 1.0450 ▼AUD/CAD:
0.8840 – 0.8910 ▼