Thursdays session saw the AUD/USD fall to lows below 0.68 as Apple reported downward revisions to its first quarter revenue guidance, citing weakness in the Chinese market which sparked widespread anxiety about global macroeconomic conditions for the year ahead. The moves were exacerbated by lighter liquidity as markets were still returning from the new years break and came during a particularly illiquid time in the Asian session. Traders fled from risk assets towards the safe haven yen and greenback, forcing the AUD lower across the board to touch its lowest levels since 2009.
The Aussie has since recovered against the US dollar, with the AUD/USD pair trading above 0.70 to begin Friday’s Sydney session. Markets are expected to remain volatile to finish out the weak as major pairs will seek to find their equilibrium prices following yesterdays massive swings.
As we have been saying all week, there is no Macroeconomic data to consider this week out of the domestic economy. The Australian dollar will continue to be at the mercy of offshore releases as well as global risk appetite, as was proved yesterday. If the Aussie can continue its recovery and test 0.7020 we could see a run to 0.7070 however on the downside we see initial support at 0.6950 before 0.6880.