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Aussie trades lower on dampened risk sentiment

AUD - Australian Dollar

The Aussie fell back below 0.77 on Friday as global risk sentiment soured as the United states heads into a long weekend. The Aussie followed the S&P500 lower through trade, retreating from 0.7775 to 0.7680. With the Kiwi also falling, the AUD/NZD cross pushed above 1.0800, continuing its six-week rally.

Looks like a quiet session ahead today with the USA observing Martin Luther King Day. The only release of note will be Q4 GDP data out of China with analysts expecting a 2.7% rise. We will also see Chinese industrial production and retail sales data which will be closely watched as indicators of both business and consumer spending.

Recent weakness has pushed the two year high of 0.7820 further out of reach. Traders will want to observe sustained trading above 0.7700 before another break higher is considered. On the downside, first support is seen at 0.7640 (weekly low) with moves below this level opening the door to 0.7600.

Key Movers

Risk aversion is the main narrative in markets this morning as the US observes the Martin Luther King Day public holiday. Friday’s dollar strength was a biproduct of the dismal mood in markets following weaker than expected retail sales and employment data. Concerns of delays in vaccine distributions only compounded the mood further.

EUR/USD fell below 1.2100 through trade with commodity linked currencies like the Australian Dollar and New Zealand Dollar the hardest hit. The pound managed to settle below 1.3600 with Prime minister Boris Johnson announcing further travel restrictions as they try to deal with potential new strains of COVID 19.

In commodities, the resurgent USD saw gold fall sharply. Oil also fell, WTI closed on Friday changing hands at USD $50 per barrel.

Expected Ranges

AUD/USD: 0.7640 - 0.7750 ▼

AUD/EUR: 0.6300 - 0.6415 ▼

GBP/AUD: 1.7580– 1.7700 ▲

AUD/NZD: 1.0730 - 1.0850 ▲

AUD/CAD: 0.9770 - 0.9880 ▼