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Australian Dollar breaks below 0.60 liquidity shocks bolster demand for USD

AUD - Australian Dollar

The Australian Dollar crashed through 0.60 US cents in overnight trade on Tuesday, touching intraday lows at 0.5962. As market volatility increases and the spreading coronavirus forces more countries into lockdown demand for the AUD continues to evaporate. Having maintained a relatively tight range throughout the domestic session, bouncing been 0.6070 and 0.6140 the AUD tumbled overnight, breaking through support barriers and the psychological 0.60 handle as broad based US dollar strength only added further pain to the already downtrodden unit.

The Australian Dollar has plunged over 6 cents since March 8 and near 11 cents since January 1 as panic among investors and broader markets lingers. With the RBA expected to announce QE measures on Thursday attentions remain squarely affixed to this unfolding health crisis and the global response. With global health officials suggesting the initial and immediate outbreak will persist for months to comes we expect the economic impact will intensify with adding mounting pressure on commodity and emerging market currencies.

Key Movers

The US dollar advanced against the majority of counterparts through trade on Tuesday, buoyed by an increased demand for liquidity as investors and corporate entities rush to sure up equity lines, while the risk of broader shutdowns dampens demand for risk. Despite moves from central banks across the world, funding markets continue to show signs of stress when sourcing the worlds base currency, forcing investors away from commodity driven and emerging market assets. Having been driven lower in the back half of February the US dollar has since rebounded as global appetite for risk evaporates and widespread panic prompt’s investors to look for haven assets. Advancing some 5%+ since March 9th we expect the USD will remain well bid through the short term – medium term.

The Euro has relinquished nearly all its resent gains dipping back to 1.10 while the Great British Pound has plunged well below 1.30, testing supports at 1.20 having touched intraday lows at 1.2011.

Attentions remain squarely affixed to the enveloping health crisis with risk demand the primary driver across currency markets through the foreseeable future.

Expected Ranges

AUD/USD: 0.5810 - 0.6130 ▼

AUD/EUR: 0.5380 - 0.5520 ▼

GBP/AUD: 1.9890 - 2.0320 ▲

AUD/NZD: 0.9980 - 1.0180 ▼

AUD/CAD: 0.8390 - 0.8590 ▼