Aussie follows Kiwi lower as RBNZ dovish turn spills over
Thursday 28 March, 2019
Daily Currency UpdateAUD - Australian DollarThe Australian Dollar moved lower through trade on Wednesday, edging back below 0.71 US cents as investors gave up recent gains, wary the RBA may follow the RBNZ shift toward an easing bias, while risk off sentiments forced investors toward haven plays. Having tested the top end of recent ranges the AUD was one of the days worst performers giving up nearly 60 points to touch intraday lows at 0.7070. Despite a sustained period of USD softness, the Aussie dollar has been stuck in a relatively tight trading band through the last month struggling to break above resistance at 0.7150 yet remaining largely well supported on moves approaching 0.7070/0.7050. Investors appear reluctant to extend upside moves as domestic economic performance falters and global growth concerns weigh on RBA expectations. With little of note on today’s domestic docket we expect the AUD will remain range bound leading into next weeks RBA policy announcement, wherein a definitive dovish shift could be the catalyst to force the dollar outside recent bonds.
Key MoversBrexit, Brexit, Brexit. The UK’s departure from the European Union remains a primary driving force and focus across currency markets as investors attempt to unravel the minefield of political uncertainty that has engulfed divorce proceedings. The Pound found support overnight edging back above 1.32 as Theresa May offered to step down if MP’s voted in favour of the current EU exit plan. In a Hail-Mary push to persuade conservative party dissidents to back her plan May has promised to quit before the next phase of negotiations, seemingly improving the likelihood a no deal break will be avoided. We anticipate Sterling will continue to fluctuate within largely constrained ranges, bouncing between 1.29 and 1.33 in the lead up to a definitive next step announcement at which point with implied volatility at its highest level since the 2016 referendum we’d anticipate a significant knee jerk correction in the order of 5% - 10%. All eye on the UK and headline news.
- AUD/USD: 0.7020 - 0.7130 ▼
- AUD/EUR: 0.6250 - 0.6350 ▼
- GBP/AUD: 1.8250 - 1.8750 ▲
- AUD/NZD: 1.0350 - 1.0500 ▲
- AUD/CAD: 0.9460 - 0.9560 ▼