AUD - Australian Dollar
The Australian dollar edged off recent highs Thursday, slipping back below 0.78 US cents amid a broader US dollar rebound. Having touched highs at 0.7820, the AUD was forced back below 0.7750, toward intraday lows at 0.7730, as the US dollar found support amid an uptick in treasury yields and optimism democrat-led stimulus measures that will help lead an economic rebound throughout 2021. That said, the US remains embroiled in civil unrest and is still firmly entrenched in this latest wave of COVID-19. With the vaccination roll out progressing slower than first hoped, short-term pressures are unlikely to disappear, opening the door to further weakness through the weeks and months ahead. Having broken above 0.78, the door is now open for a move toward 0.80. With yesterday’s announcement that our own domestic vaccination program will be brought forward, with 4 million Australians to be inoculated before the end of March, there are hopes recent border closures will no longer be required and we can return to a normal COVID free platform come H2.
Our attentions today turn to US non-farm payroll data as the headline macroeconomic marker, while risk sentiment continues to broader flows.
The US dollar bounced off near three-year lows through trade on Thursday to mark fresh weekly highs amid optimism for an economic rebound and a broader euro sell off. The dollar index advanced over half a percent and closed in on a break back above 90, as investors responded to expectations a Biden government will provide more stimulus measures to bolster the economic recovery, while bond yields edged higher with treasury yields climbing above 1% for the first time in 10 months. While the broader medium-term view remains bearish, there is scope to suggest the pace of depreciation could now stall with resistance on moves approaching the March 2018 low.
The euro gave up the weeks early gains, drifting back below 1.23 as investors sought to absorb profits, capitalising on the recent appreciation.
The pound again failed to extend beyond 1.36 as national lockdown measures curb Q1 economic expectations and analyst begin pricing in a shift to negative interest rates. Having climbed above 1.37 this week, sterling slipped to intraday lows at 1.3537 overnight. With the British health system overrun and lockdowns expected to remain in place as officials try and control this latest outbreak, analysts have brought forward expectations for Bank of England policy action, pricing in a shift to negative rates before H2, most likely May. As pressure grows and the economy continues to struggle we expect extensions beyond the May 2018 high may he hard won.
0.7680 - 0.7820 ▼AUD/EUR:
0.6270 - 0.6380 ▲GBP/AUD:
1.7280 - 1.7620 ▲AUD/NZD:
1.0650 - 1.0730 ▼AUD/CAD:
0.9790 - 0.9920 ▼