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Aussie hits three-week low as risk sentiment sours

Monday 20 September, 2021

Daily Currency Update

The Australian dollar hit a fresh three-week low on Friday, down 0.36% to open this morning at 0.7262. It wasn't a one-way decline throughout intra-day trade however with some promising price action seeing the Aussie hit 0.7321 earlier in the day. Nevertheless, it wasn't to last as the Americans bid up the greenback late on Friday which saw the Aussie tumble. Friday was a quiet day on the economic calendar with very little to drive direction. Nevertheless, the flight to safety was well and truly on with both the NASDAQ and the S&P500 falling 0.91% throughout the day. The turn in risk-sentiment and the rise in 10-year US-Treasury Bond yields by 3-basis points forced the US-Dollar index higher by 0.41% and subsequently, the Aussie lower. Domestically, the Aussie was already under significant pressure however with lockdowns causing significant changes in employment data. Australia reported the largest loss of employment since May 2020 on Thursday. Adding further weakness to the Aussie are fears of economic contagion and slower growth from China as the China Evergrande Group continues to grapple with its debt crisis. Iron Ore has also plummeted from these concerns which also did not help the Aussie. Moving into a new week all eyes will be on the FOMC statement in the US, slated for Thursday. Closer to home, Australia is expecting its own Central Banks Meeting minutes as well.

Key Movers

The world's reserve currency dominated price action on Friday as risk sentiment shifted to the negative. Equities tumbled during the American trading session and bond yields rose. The flight to safety ultimately saw the US dollar become the clear performer for the day and record a healthy 0.41% against a basket of currencies. Unfortunately for the Great British pound, US dollar strength added to their woes and sent the cable down 0.39%. Already on shaky ground after a poor retail sales reading domestically, the stronger greenback sent the sterling even lower to hit a fresh weekly low at 1.3738.

Expected Ranges

  • AUD/USD: 0.9219 - 0.9330 ▲
  • AUD/EUR: 0.6155 - 0.6229 ▲
  • GBP/AUD: 1.8787 - 1.9014 ▲
  • AUD/NZD: 1.0268 - 1.0391 ▲
  • AUD/CAD: 0.7218 - 0.7305 ▲