AUD - Australian Dollar
The Australian dollar toyed with a break above resistance at 0.7575/0.7580 through trade on Wednesday amid a flood of major headlines and mixed macroeconomic indicators. Signs a US fiscal stimulus bill is imminent and renewed optimism a Brexit deal will be struck, coupled with a surprise uptick in Manufacturing and Service activity across Europe helped drive risk asset gains and push the AUD toward intraday highs at 0.7579. The AUD gapped lower immediately following the Federal Reserve and FOMC policy meeting as the Fed made no changes to its QE balance sheet. Some analysts expected further loosening of the monetary policy mandate prompting a short run AUD sell off, marking lows at 0.7540. Markets then quickly reversed the move as Fed President Jerome Powell addressed reporters in a press conference following the meeting. Powell was quick to remind investors of the Fed’s dovish stance, adamant rates will remain flat through the foreseeable future. Recouping losses, the AUD jumped straight back to 0.7575 and buys 0.7571 at the time of writing.
The US dollar's woes continued through trade on Wednesday, battered by expectations of a near trillion-dollar fiscal stimulus program to be made available before Christmas and a shockingly sharp downturn in domestic retail sales. Reports US lawmakers have formed a COVID-19 relief bill that addresses the most egregious and contentious issues fuelled optimism and risk demand that drove investors toward risk assets and away from the US dollar. The downturn was compounded following a steep decline in consumer spending through November. Headline sales fell over 1% and are now well into negative territory, a clear signal that restrictions and changing individual habits are smothering normal economic activity.
Sterling outpaced major counterparts overnight, extending beyond 1.3550 as Brexit negotiations suggested progress had been made on key sticking points. It appears fishing rights remain the final barrier standing in the way of a full-fledged trade agreement, and we remain optimistic this will not derail negotiations and force a no deal divorce. With a no deal breakup avoided, the pound should enjoy ongoing upside through the end of the year and at the very least early 2021.
Attentions today remain affixed to both Brexit negotiations and fiscal stimulus headlines. Any sign these risk barriers have been overcome could provide the catalyst to push the dollar lower and allow the Euro to extend beyond 1.22, with risk assets like the AUD and NZD breaking resistance to test 076 and 0.7120 respectively.
0.7490 - 0.7620 ▼AUD/EUR:
0.6120 - 0.6250 ▼GBP/AUD:
1.7620 - 1.8080 ▲AUD/NZD:
1.0610 - 1.0720 ▲AUD/CAD:
0.9590 - 0.9690 ▲