AUD - Australian Dollar
The Australian Dollar opens lower this morning as markets brushed aside positive news on the US fiscal stimulus front. Despite US lawmakers agreeing a $900b fiscal relief package, risk sentiment soured as investors were instead focused on growing Covid-19 concerns and renewed travel restrictions across Europe.
Consistent with the risk off mood, global equities fell, crude oil was also down and the USD exhibited broad based strength. The Australian dollar fell to intraday lows of 0.7462 against the USD before recovering significantly to trade nearer to 0.7580 heading into todays session. There’s a suggestion that lower levels of liquidity, due to the Christmas period, are delivering exacerbated moves in currency markets at present and we could see continued volatility until liquidity levels normalize after the Christmas break.
Looks like a quiet day in terms of data releases. On the domestic docket, retail sales numbers are set to be released before attention turns offshore to US consumer confidence data.
Whether the Australian Dollar can regain its footing above the 76c handle will be of interest to traders. Given recent moves, the first line of resistance is seen around 0.7640 with a move beyond this opening up the door to a test of the June 2018 high of 0.7675.
As we touched on above, markets shrugged off the $900b US fiscal relief package and looked to shed risk as renewed travel were announced across Europe. The price action was textbook risk off as the S&P500 fell 0.7%, Euro Stoxx 600 fell 2.3%, commodities such as brent crude oil declined over 4% and the USD was broadly stronger.
The US fiscal relief package delivered little to surprise markets with the package set to be coted on today in the senate. News of a more contagious strain of COVID19 spreading across London has seemingly spooked markets. New lockdowns have been imposed by the UK government and many countries have closed their borders to UK travelers until the outbreak is contained.
In currencies, commodity linked currencies were the weakest on the day whilst the GBP also fell below 1.32; not surprising given the new lockdowns and no certainty reached on Brexit. EUR and JPY were less affected, falling roughly 0.2% against the greenback.
0.7500 – 0.7640 ▼
1.7600 – 1.7900 ▲
1.0620 – 1.0710- ▲
.6150 - 0.6230 ▲
0.9680 – 0.9800 ▲