AUD - Australian Dollar
The overnight session saw the Australian dollar fall slightly against the greenback despite upbeat global equity markets. Having initially soared to 0.7318 in the afternoon, the Australian dollar has fallen back below the key 0.7300 handle to settle this morning around 0.7275. The New Zealand Dollar was one of the best performers on the day yesterday, ultimately forcing the AUD/NZD cross lower to 1.0572, representing a 4-month low.
Looking to the day ahead, we will get domestic inflation expectations from the Melbourne institute before focus shifts offshore. In New Zealand, we will get net migration data which will obviously remain subdued due to the lockdowns, Industrial production data out of the Eurozone, UK trade balance and GDP data and finally US October CPI is due.
From a technical perspective, risks seem to be skewed to the downside however solid support at 0.7210 would need to be broken before moves lower would be considered. Having failed to consolidate above the 0.7300 handle despite the positive equity sentiment, this now acts as our first level of resistance before 0.7345.
The overnight session was relatively quiet in global markets as the US was closed for Veterans Day. Global equities however did continue their vaccine induced rally despite an uptick in cases in the US and Europe. The S&P500 rallied 0.8% as tech stocks surged. As we touched on above, despite the positive sentiment, the USD index was 0.3% higher on the day after a few weeks of weakness.
In Europe, we heard from ECB president Lagarde who reiterated that the alternative monetary policy measures of emergency bond purchases and long-term loans are expected to retain their importance over the coming years. This is consistent with the market’s view that the ECB prefers not to lower their already negative cash rate further.
0.7210 - 0.7345 ▲AUD/EUR:
0.6150 - 0.6220 ▲GBP/AUD:
1.8100 - 1.8235 ▼AUD/NZD:
1.0550 - 1.0680 ▼AUD/CAD:
0.9430 - 0.9560 ▲