Daily Currency Update

AUD - Australian Dollar

The Australian dollar tumbled through trade on Thursday, plumbing new 11 month lows as a disappointing labour market print and an uptick in risk off demand drove direction. The unemployment rate unexpectedly jumped through trade on Thursday increasing from 5.1% to 5.3%. While the uptick can be largely explained by an increase in the participation rate rather than a distinct slowdown in labour market performance the upturn still sparked calls for an imminent RBA rate cut and drove the AUD below 0.6650.

Despite China announcing a slowdown in the spread of the Coronavirus, its proliferation in other countries, namely, South Korea, Japan and Singapore amplified concerns the virus will linger for some months to come, increasing the scope and scale of the economic impact. With risk on demand largely evaporated the AUD touched intraday lows at 0.6615 and appears to have consolidated a break below supports at 0.6680 setting up a shift to lower bound ranges moving through the short term.

Key Movers

The US Dollar advance continued through trade on Thursday, touching three-year highs when valued against a basket of major currency counterparts. Sustained strength across key macroeconomic indicators and an economy that is largely immune to the threats of the coronavirus has helped fuel demand for the world’s base currency as a key safe haven play.

The Euro depreciation continued Thursday, posting intraday lows at 1.0780 driven by a persistent carry trade play and sustained softness across key macroeconomic indicators. The combined unit has struggled against the US dollar throughout the year to date as the mismatch between key major economic data sets highlights the gap in expected monetary policy programs moving through the year ahead. Having tumbled over 3% through the year to date attentions now turn to key services and manufacturing PMI data prints as markers guiding direction into the weekly close.

Despite an uptick in domestic retail sales the Great British Pound fell to intraday lows at 1.2849 through trade yesterday. Thursday’s downturn marks a 1.4% depreciation through the week thus far and sees sterling unwind all last weeks gains as mounting expectations for increased fiscal stimulus have abated and the likelihood of a Bank of England rate cut before year end gained further traction. Futures are now pricing an 80% chance of a rate cut by December, up from 69% on Wednesday.

Expected Ranges