Daily Currency Update

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Relative volatility subsides as AUD holds onto gains

AUD - Australian Dollar

The Australian Dollar remained largely range bound through trade on Monday, despite broader USD gains and month end rebalancing. The AUD bounced between intraday lows at 0.6112 and session highs at 0.6180, largely holding onto the gains won throughout last week. The Federal government proffered a third economic stimulus package taking the total fiscal injection to 10% of GDP. The plan directs funds to key business and industry groups in a bid to shore up incomes and support cash flow while the economy comes to a grinding halt. Buoyed by the increased fiscal support equities advanced some 7%, while the AUD shrugged off a broad-based US dollar advance and further weakness in oil prices and jumped against key major crosses, testing 0.56 against the EUR while creeping ever nearer 0.50 GBP.

Attentions remain squarely affixed to ever evolving risk sentiment as investors largely ignore the slew of dire macroeconomic data sets flooding the economic docket. Having rebounded strongly after touching 17-year lows at 0.5510 the AUD remains open and vulnerable to another risk off move and USD upturn as the broader global economy continues to grapple with the uncertainties of the coronavirus. Watch resistance at 0.6180/0.62 with initial support on moves approaching the psychological 0.60 handle.

Key Movers

The US dollar advanced against the majority of major counterparts through trade on Monday, finding support after a string of daily depreciations through last week. Month end rebalancing helped bolster demand for the world base currency, driving the dollar index 1 % higher as the Euro fell back through 1.11 and 1.1050 and Sterling’s upturn stalled.

While investors have checked the upturn of mid-March there is still ample scope for USD upside. Despite the Fed injecting masses of funding into the global economy and stablising swap lines USD demand and supply side balances remain fragile while another liquidity squeeze could prompt another run on emerging markets and risk assets driving the dollar higher.

Uncertainty continues to dominate direction and we expect the USD will remain relatively well bid through the short term.

Expected Ranges

AUD/USD: 0.5930 - 0.6230 ▼

AUD/EUR: 0.5430 - 0.5620 ▲

GBP/AUD: 1.9850 - 2.0420 ▼

AUD/NZD: 1.0080 - 1.0330 ▲

AUD/CAD: 0.8580 - 0.8810 ▲