AUD - Australian Dollar
An uncertain undercurrent perpetuated through trade on Tuesday, forcing the AUD to maintain a narrow trading band as investors adopted a measured and cautious tone. The COVID-19 Pandemic marked a series of grim milestones across Europe and the US as new infections, hospitalisations and daily deaths all continued to rise, prompting calls for more restrictions in an attempt to curb the spread of this second wave. While equities and stocks came under added pressure as investors chased bond’s and haven assets higher currency markets remained relatively well insulated. Despite the risk off mood the AUD edged marginally upward bouncing off lows at 0.7115 to touch 0.7147 before creeping lower into this morning’s open. The AUD continues to lag its antipodean and commodity counterparts as investors prepare for next weeks RBA policy announcement. Attentions today turn to domestic CPI data. Price pressures are expected to remain soft, while inflation remains woefully short of the RBA’s 2-3% target band, amplifying and supporting calls for policy easing on November 3rd. With so many key risk events on the horizon we expect the AUD will maintain its narrow trading band through this week as investor delay bets in either direction until after the US election.
The US Dollar retreated through trade on Tuesday, giving up Monday’s gains amid growing election uncertainty and surging COVID-19 infections and hospitalisations. Despite a cautious risk backdrop and steep equity sell off the USD struggled to find any real momentum as investors continue to withhold bets ahead of the November 3rd election. National polls have Biden firmly ahead of the incumbent, however the vagaries of Electoral College system mean a close run race in key battleground States ensure the result is far from certain.
Having tracked sideways through much of the session the EURO has fallen sharply on open amid speculation Germany and France will introduce new lock down measures. Germany is expected to impose a two-week lockdown while French President Emmanuel Macron will address the nation this evening, outlining the conditions for what will likely be a month long, nationwide shutdown. France has recorded increasing record daily hospitalisations and infections through the last week as this 2nd wave spirals out of control. With Europe the epicentre of this second surge we anticipate further restrictions will follow weighing on the common currency. Having touched 1.1840 overnight the Euro has plunged back below 1.18 and current trades at 1.1785.
0.7020 - 0.7180 ▲AUD/EUR:
0.5980 - 0.6080 ▲GBP/AUD:
1.8020 - 1.8480 ▲AUD/NZD:
1.0550 - 1.0680 ▼AUD/CAD:
0.9350 - 0.9420 ▼