Home Daily Commentaries Aussie under sustained pressure having broken key technical supports

Aussie under sustained pressure having broken key technical supports

Daily Currency Update

AUD - Australian DollarThe Australian Dollar came under sustained pressure on Tuesday despite a general calm spreading across markets as investors reassessed the possible impact of the Coronavirus. While the virus continues to spread at an alarming rate within China, the low mortality rate has fostered some level of optimism, when compared with SARS, and an expectation that impacts to GDP could be confined within the Asia Pacific region with China, Hong Kong, Taiwan and Australia perhaps the hardest hit. The biggest concern for the Australian economy at present is the expected impact tourism and tourism spending. Reportedly group tourism from China has been banned through the coming months, at least until the virus is contained, a huge hit to local economies with Chinese tourist making up 28% of all tourism spending. The AUD fell a further 0.2% to touch intraday lows at 0.6750 as attentions turn to today’s CPI inflation print. A lacklustre read could amplify calls for the RBA to bring forward additional rate cuts and with futures indicators pricing in just a 30% chance for a cut in February there is scope for further downside pressure should numbers miss the mark. Watch supports at 0.6750 with a break possibly prompting a move toward .6670/90.

Key Movers

The Great British pound was the biggest looser through trade on Tuesday falling back through 1.30 for the first time since mid-January. Touching one-week lows Sterling came under pressure when valued against both the USD and Euro as the reality of the UK leaving the European single market on Friday and the possibility of a Bank of England Rate cut today sink in. Having touched 1.2975 the Pound found some support edging back toward 1.30 into the close as investors appear reluctant to pull the trigger and extend moves ahead of these two key market events. The US Dollar bounced against other safe haven assets, up against both the Yen and Swiss Franc as concerns concerning the Coronavirus calmed through Tuesday. While news and headlines are running on a 24-hour delay, the low mortality rate has helped ease fears the impact of the virus will spread to the broader global economy, fostering an expectation the economic impact will the largely regionalised. US consumer confidence also rose by more than expected, touching 5 month highs while durable goods orders where bolstered by increased defence spending. The dollar index is up 0.02% at 97.98 at time of writing. Attentions now turn to tonight FOMC policy decision as a key marker governing direction. We anticipate policy makers will leave rates unchanged.

Expected Ranges

  • AUD/USD: 0.6670 - 0.6830 ▼
  • AUD/EUR: 0.6050 - 0.6190 ▼
  • GBP/AUD: 1.8980 - 1.9420 ▼
  • AUD/NZD: 1.0280 - 1.0420 ▲
  • AUD/CAD: 0.8820 - 0.8980 ▼