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Aussie dollar nears multi year lows

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 ▼