AUD - Australian Dollar
The AUD edged upward through trade on Monday testing 0.61 US cents as risk assets enjoyed renewed support on optimism Europe may begin easing containment measures as Spain and Italy appear to have weathered the worst of the COVID19 pandemic. Spain reported its lowest number of new cases in over a fortnight while the mortality rate fell for a fourth consecutive day and Italy continues to see a downturn on new cases and daily deaths. With focus now shifting to the US as the new epicenter, President Trump promised Americans there is light at the end of the tunnel, as social distancing measures appear to be slowing the pace of community transmission. Having remained largely range bound for much of the domestic session, bouncing between 0.5990 and 0.6035 the AUD crept higher overnight touching highs at 0.6105.
Uncertainty and risk demand continue to drive direction, capping AUD upside through the short term. While there appears to be some improvement in the longer term fight both globally and in the US we are still 2-4 weeks away from the possible peak of the curve, meaning an increased period of volatility and fluctuating risk profile as markets attempt to adjust to the changing environment fostered by the Pandemic.
Attentions today turn the RBA policy meeting, the first since emergency QE measures were enacted. We anticipate the RBA will refrain from adding to its new QE program. Having highlighted an aversion to progressing to negative interest rates markets will be keenly attuned to the rhetoric attached to any post meeting commentary as a marker for guiding longer term direction.
Safe Havens suffered through trade on Monday as improvements in risk sentiment helped bolster demand for risk assets and commodity currencies. Despite a correction in Oil prices the Norwegian Kroner lead majors advancing across the board while the USD, CHF and JPY all fell and the Euro struggled to make any meaningful move in either direction.
The dollar index fell 0.1% while the JPY and CHF fell 0.5 and 0.1 respectively. Sterling also struggled, dipping back below 1.22 after reports UK prime minister Boris Johnson had been moved to intensive care as a precaution were confirmed. Having been hospitalized over the weekend Johnson’s symptoms seemingly worsened, creating concern among markets as to who will guide the country amidst this chaos if Johnson is impaired for an extended period of time.
Attentions today remain squarely affixed to the evolving pandemic with fluctuating risk demand governing direction. Boris Johnson’s condition serves as a reminder of the indiscriminate nature of this virus and the risks it still pose.
0.5930 - 0.6180 ▲AUD/EUR:
0.5530 - 0.5720 ▲GBP/AUD:
1.9920 - 2.0520 ▼AUD/NZD:
1.0180 - 1.0320 ▲AUD/CAD:
0.8490 - 0.8630 ▲