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Aussie under pressure again testing 60 US cent support levels

AUD - Australian Dollar

Last week saw further volatility for the Australian dollar albeit at its lowest levels in three weeks, closing just below the psychological 60 US cent handle of 0.5990. The Australian dollar ranged between 0.6208 and 0.5981 for the week, dropping 3% from weekly highs as coronavirus concerns shifted focus to large numbers in the United States where military personnel has been deployed to New York City on the weekend.

The Australian Dollar could see further declines this week should the Reserve Bank of Australia cut interest rates to zero for the first time in history. The previous statement in their emergency cut meeting on March 19th noted members had no appetite for negative interest rates and unlikely to cut further from its current record lows of 0.25%. With markets pricing in a 20% chance cut, a wait and see approach is likely as to evaluate current economic conditions following the COVID-19 outbreak globally.

Direction for the local currency is likely to be focused on a number of employment figures out of North America this week.

The Australian dollar opens this morning at 0.6010. We expect support levels to hold on moves approaching 0.5860, while any upward push will likely meet resistance at 0.6070.

Key Movers

Traditional safe haven moves were in play on Friday as risk sentiment continued to wane with coronavirus cases continuing to climb. The US Dollar index was 0.6% higher which is measured against a basket of currencies, seeing highs of 100.80 and disregarded poor non-farm payroll figures.

The non-farm payroll print showed an appalling reading of 700,000 lost jobs last month, a worrying sign for the US economy with economist’s surveys expecting a drop of 100,000. The official employment figure increased to 4.4% up from 3.5% in the previous month. Jobless claims this week are expected to be large again with expectations of another 5 million citizens filing for unemployment in the United States this week.

The EUR/USD saw more large swings down and finished at 1.0800, down nearly 2.9% for the week as uncertainty for further stimulus within the Eurozone weakened the single unit. A raft of services PMI figures in the Eurozone were released on Friday and saw large drops in business activity as expected. Hopes for an agreement for the so called “coronabonds” will potentially be decided this week.

OPEC meetings that were scheduled to go ahead this week are likely to be delayed till next week as rifts continue between Russia and Saudi Arabia. The Stability of oil prices will be a major talking point as prices at the bowser in the United States hit 18-year lows with demand for petrol diminishing and supply yet to be cut.

A focus on macroeconomic data releases look to be eagerly watched upon as investors digest the impact of virus cases and lockdowns by governments. Safe haven plays expect to remain in play as COVID-19 spreads throughout the world and into a global recession.

Expected Ranges

AUD/USD: 0.5860 - 0.6070 ▼

GBP/AUD: 2.0150 - 2.0550 ▲

AUD/NZD: 1.0200 - 1.0280 ▼

AUD/EUR: 0.5520 - 0.5600 ▼

AUD/CAD: 0.8480 - 0.8600 ▼