Daily Currency Update

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AUD leads gains, breaking back above 0.65 US cents

AUD - Australian Dollar

The AUD outperformed all major counterparts again through trade on Tuesday, extending above resistance at 0.6460 to break above 0.65 and touch intraday highs at 0.6514. Risk sentiment continues to improve and the AUD capitalised on broad based US dollar losses throughout the overnight session holding onto gains despite a USD rebound. Having corrected lower through the start of last week the AUD has since enjoyed a series of higher highs and higher lows testing key short-term technical handles while leading commodity currencies higher. Market appetite for risk has improved through the last week as countries around the world begin loosening lockdown and social distancing restrictions. Australia has emerged as a global leader in the fight against the coronavirus having successfully flattened the curve before serious widespread community transmission was able to take hold. Our ability to combat the virus without going into full scale lockdown and level 4 restrictions means the domestic economy is well-placed to rebound in the wake of the pandemic and as Asia, led by China and Taiwan, appears to be kick-starting their own economic engines there is hope the Asia/Pacific region could recover faster than other key economic areas.

Attentions today turn to Chinese manufacturing and services PMI prints as key markers against the Chinese economic recovery. Having enjoyed strong gains in manufacturing through March investors will be looking for sustained expansion as back orders have been filled already as the impacts of the broader global recession may now be filtering through. A strong read will likely help sustain this risk on and AUD upturn and open the door for a consolidated extension above 0.65. The AUD currently buys 0.6486 US cents.

Key Movers

With little of note on the macroeconomic calendar in what was a largely non-eventful trading day the USD suffered losses against most major counterparts as investors turned their attentions turn to today’s Federal Reserve policy meeting and looked to balance positions leading into month end. The Fed has aggressively slashed interest rates, while resuming quantitative easing measures and solidifying global liquidity lines in the wake of the COVID-19 outbreak and markets are keenly attuned to any commentary from the worlds leading central bank that may hint to longer term policy plans. Countries and States around the world are beginning to loosen social distancing restrictions as the pace of Coronavirus proliferation eases. Risk sentiment has improved through the last week driving the USD off highs and forcing the world’s base currency lower against a basket of major counterparts. Having dropped against the Euro and Pound throughout the European session the Dollar recouped losses in New York rallying 60 points into the daily close, without any real catalyst outside a correction in the Euro following Fitch’s downgrade of Italian debt rating. Fitch marked Italian bonds down to the lowest investment grade, highlighting the need for a comprehensive and widespread European rescue package.

Attentions today turn to the Fed policy meeting and accompanying statement ahead of tomorrow’s ECB policy meeting. We expect choppy trade in the lead up to both risk events as investors attempt to get a handle on longer term yield plays.

Expected Ranges

AUD/USD: 0.6250 - 0.6550 ▲

AUD/EUR: 0.5880 - 0.6030 ▲

GBP/AUD: 1.8980 - 1.9320 ▼

AUD/NZD: 1.0620 - 1.0780 ▲

AUD/CAD: 0.8980 - 0.9130 ▲