Daily Currency Update

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Aussie slump continues despite broader US softness

AUD - Australian Dollar

The Australian dollar edged marginally higher through trade on Monday, bouncing off 11 year lows and creeping back through 0.66 US cents. Risk-off mood dominated markets and broader direction again as the coronavirus continues its worrying spread beyond China. With an uptick in the number of cases reported in Italy and the Middle East fears a global pandemic may be at hand, escalated Monday and forced a shift toward haven assets.

In this risk off environment the AUD will remain under pressure with upside gains capped on moves approaching 0.6650 and 0.6700, with supports at 0.6580 closely monitored for sign of an extended downward correction.

Key Movers

Traditional safe havens were the big winners on Monday as investors dumped risk assets in the face of widespread risk off sentiment. The JPY and CHF jumped higher as the number of coronavirus cases outside China surged again. Stocks and equities fell sharply, while Wall streets volatility index touched 6-month highs and gold rallied to a 7-year peak. Fears a global pandemic is at hand have forced markets to re-asses global growth estimates as the broader impact of the coronavirus continues to grow.

The USD downturn against the JPY and CHF continued through Monday as the risk of environment and last weeks macroeconomic miss amplified calls for a FOMC and Fed rate cut. Investors priced in an increased chance of an interest rate adjustment by June forcing the dollar index back toward 99 at 99.30.

The Great British pound fell through trade on Monday as risk off pushed markets to haven assets and away from sterling as fears the EU and UK will fail to reach a revised trade agreement by the end of the 11 month negotiation period. Losing 0.2%, cable touched 1.2930 and weakened against the Euro.

Attentions today remain with coronavirus headlines as the primary marker driving broader risk off sentiment.

Expected Ranges

AUD/USD: 0.6580 - 0.6690 ▼

AUD/EUR: 0.6050 - 0.6190 ▼

GBP/AUD: 1.9480 - 1.9650 ▼

AUD/NZD: 1.0380 - 1.0450 ▼

AUD/CAD: 0.8730 - 0.8820 ▲