Aussie dollar trades above US$0.67
Monday 20 March, 2023
Daily Currency UpdateThe Australian dollar is slightly stronger this morning when valued against the Greenback. The Aussie dollar rallied for the second successive day on Friday and climbs to a nearly two-week high during the first half of the European session. The pair currently trades just above the 0.6700 round-figure mark and is drawing support from a combination of factors. Multi-billion-dollar lifelines for troubled banks in the US and Europe ease fears about widespread contagion which boosts investors' confidence. This is evident from a modest recovery in the equity markets, which undermines the safe-haven US dollar and benefits the risk-sensitive Aussie. In other news, on Friday the People’s Bank of China (PBOC) announced it cut banks’ Reserve Requirement Ratio (RRR) by 25 basis points (bps), effective from March 27.
Looking ahead this week and on Monday the Reserve Bank of Australia (RBA) Assistant Governor (Financial Markets), Christopher Kent is due to deliver a speech titled "Long and Variable Monetary Policy Lags" at the Kanga News Debt Capital Market Summit in Sydney. Christopher Kent is responsible for advising Reserve Bank Board members, who decide where to set the nation's key interest rates and on matters relating to economics, and his public engagements are often used to drop subtle clues regarding future policy shifts. On Tuesday the RBA will release its latest Monetary Policy Meeting Minutes, a detailed record of the RBA Reserve Bank Board's most recent meeting, providing in-depth insights into the economic conditions that influenced their decision on where to set interest rates. On Friday we will see the release of the Purchasing Managers' Index (PMI).
Key MoversThe US dollar fell on Friday as further declines in the shares of Credit Suisse and First Republic Bank rattled markets fearful of contagion and increased concerns that a recession lies ahead because of the impact of tighter monetary policy. The fate of Credit Suisse could be decided in the next few days after a torrid week for Switzerland's second biggest bank. Local media reported the Swiss cabinet had gathered for a crisis meeting at 5pm on Saturday (3am, Sunday, AEDT) to discuss the ailing bank's future, as reports swirled of a possible takeover by its biggest Swiss rival, UBS and the potential shedding of up to 10,000 jobs. Investors and customers pulled their money out of Credit Suisse over the past several days as turmoil swept the global banking industry following the collapse of two US lenders.
US stocks fell Friday as investors pulled back from positions in First Republic and other bank shares amid lingering concerns over the state of the U.S. banking sector. The Dow Jones Industrial Average lost 384.57 points, or 1.19%, to close at 31,861.98 points. The S&P 500 slid 1.10% to end at 3,916.64 points, while the Nasdaq Composite was down 0.74% to 11,630.51 points. U.S.-listed shares of Credit Suisse closed down nearly 7%, as traders parsed through the bank’s announcement that it would borrow up to $50 billion francs, or nearly $54 billion, from the Swiss National Bank. The stock lost 24% over the course of the week.
- AUD/USD: 0.6600 - 0.6800 ▲
- AUD/EUR: 0.6150 - 0.6350 ▲
- GBP/AUD: 1.8000 - 1.8200 ▼
- AUD/NZD: 1.0550 - 1.0750 ▼
- AUD/CAD: 0.9050 - 0.9250 ▲