Aussie touches 11 week high amid broad based USD weakness

Daily Currency Update

AUD - Australian DollarWith increased optimism filtering through the markets on Tuesday, the Australian dollar rallied to three-month highs against the world’s base currency. With the bulk of the gains coming during the North American session, the pair rose from 0.6580 to touch 0.6675. Investors are seemingly encouraged by increasing signs of economic recovery as restrictions continue to be lifted and economies are being reopened. This optimism has for now offset concerns of further escalations in the US-China tensions. Interestingly, the AUD/NZD cross fell from 1.0730 to 1.0690 as the kiwi outperformed. On the domestic docket for today we have Q1 construction data, which is tipped to be dampened by massive disruption courtesy of the bushfires and the coronavirus pandemic. Although risks are skewed to the downside, it is not expected to be a market mover. New Zealand’s central bank will also be publishing its bi-annual financial stability report with traders keen to get a read on how the financial system is responding to the crisis. Later in the day we will have some industrial profits data out of China which is also expected to print on the softer side after a 34.9% contraction in March. Finally, overnight we will get some commentary from FOMC’s Bullard and Bostic as well as the Richmond fed index and federal reserve beige book. With a lack of domestic impetus heading into today's session, we look for the Aussie to continue to trade on global risk sentiment. Currently, trading above previous resistance at 0.6650, a sustained hold above this handle will open up the possibility of a run towards 0.6700 and 0.6780 however on the downside, the pair remains vulnerable with weak support at 0.6600 before 0.6550.