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Aussie dollar range-bound amid growing COVID-19 concerns

AUD - Australian Dollar

The Australian dollar finished another week with solid gains, although still unable to settle above the 0.70 cent level against the Greenback. The pair has been comfortably consolidating above the 0.6900 level since July. Any upside on the Aussie started last week with the labour market figures released by the Australian Bureau of Statistics on Thursday, which showed the country’s unemployment rate had risen to 7.4 per cent for the month of June. The highest it’s been since 1988. The coronavirus outbreak in Victoria still remains in the headlines. After the state of Victoria recorded 363 new cases of coronavirus on Sunday it will be compulsory from Thursday that face masks be worn.

There are no scheduled data releases in Australia on Monday. All eyes this week will be on the Reserve Bank of Australia Monetary Policy Meeting Minutes for July, which are released on Tuesday. On Thursday, Australian Treasurer Josh Frydenberg will deliver the latest economic statement update which will include information about government support programs. Both Monetary and Fiscal policy will be closely watched this week as the downside risks to the economy continue due to the resurgence of the coronavirus in Australia. From a technical perspective, the AUD/USD pair is currently trading at 0.6987. We continue to expect support to hold on moves approaching 0.6930 while now any upward push will likely meet resistance around 0.7025.

Key Movers

The Greenback was broadly lower on Friday as the euro rose to just under a four-month high, with negotiations underway between European Union leaders on a recovery fund that could lift the bloc out of the current recession. The 27 EU leaders met over the weekend to put together a new stimulus plan however they are struggling to reach consensus on the 2021-27 budget, which is proposed above 1 trillion euros, and a linked new recovery fund worth 750 billion euros, meant to help rebuild southern economies most affected by the pandemic. The EUR/USD pair closed a fourth consecutive week with gains in the 1.1420 area, its second-best daily close this year. The Greenback remained under pressure on Friday as the number of new coronavirus cases in the US continued rising to daily records of over 70,000 per day. On the data front, the US published the preliminary estimate of the July Michigan Consumer Sentiment Index, which came in at 73.2, much worse than the 79 expected and falling from 78.1 in the previous month. There are no scheduled releases in the United States on Monday, with the market now heavily focused on the prospect of another US fiscal stimulus package coming in over the next two weeks.

Expected Ranges

AUD/USD: 0.6900 - 0.7030 ▼

AUD/EUR: 0.6080 - 0.6180 ▼

GBP/AUD: 1.7880 - 1.8020 ▲

AUD/NZD: 1.0620 - 1.0720 ▲

AUD/CAD: 0.9450 - 0.9550 ▲