Aussie surges through 0.62 as volatility falls and risk demand rallies
Thursday 9 April, 2020
Daily Currency UpdateThe Australian dollar pushed through a key short-term resistance level through trade on Wednesday, breaking above 0.6220 to touch intraday highs at 0.6241. Risk assets enjoyed another good session as sustained improvements in market demand for risk and a decline in volatility across a series of key measures helped fuel AUD gains and allowed investors to largely disregard a ratings cut by Standard and Poors. S&P reduced its outlook on Sovereign bonds from stable to negative, forcing an intraday downturn and session low at 0.6115 before reports containment measures may soon be eased helped drive another risk on run. Fatalities and the pace of community transmission continues to fall across Europe while the US is beginning to see signs that social distancing measures are working, allowing key health officials to downgrade estimates of mortality, suggesting 100,000 deaths is no longer inevitable.
While CoVID 19 remains front and centre in driving direction the AUD remains vulnerable to a downward correction. However, as conditions improve and the scope for gains driven by an upturn in risk sentiment is improving. Watch resistance on moves approaching 0.6250 -0.6290 with supports forming at 0.5980/0.60.
Key MoversThe US dollar edged higher through trade on Wednesday when measured against a basket of key major counterparts. Despite suffering significant losses against key risk and commodity driven currencies the US dollar index crept upward, buoyed by gains against the Yen and Euro. The Euro fell back below 1.09 as finance ministers failed to agree terms for a united package of support for companies, governments and individuals across the region. A proposed joint European bond was rejected by some countries with the Netherlands insisting that a blank cheque approach to lending was not acceptable and conditions must apply. Such demands were refuted by Italy, as the Italian government is not prepared to accept such conditions for fear of the political consequences at home and the restrictions it would place on their ability to rebound from this crisis in the months and years ahead. Talks are set to resume today.
- AUD/USD: 0.5990 - 0.6290 ▲
- AUD/EUR: 0.5580 - 0.5820 ▲
- GBP/AUD: 1.9620 - 2.0380 ▼
- AUD/NZD: 1.0220 - 1.0450 ▲
- AUD/CAD: 0.8550 - 0.8820 ▲