Aussie slump continues despite broader US softness
|AUD - Australian Dollar
The Australian Dollar opens this morning having struggled to bounce off decade lows as a broader risk off mood continues to cast a pall over currency and equity markets. The AUD was one of the worst performers through trade on Tuesday, failing to mount any real upside momentum as fears the coronavirus will morph into a global pandemic escalate. Having touched intraday highs at 0.6620 the Aussie dollar slipped back below 0.66 and again tested key supports at 0.6585/90. Having fallen nearly 2.5% in the last week, we anticipate the AUD will come under increasing pressure as markets continue to reposition themselves ahead of an everchanging global economic outlook driven by the rapid spread of the coronavirus.
With little of note on today’s macroeconomic docket direction will again derive from the global appetite for risk.
Key Movers
The US dollar slipped against most majors (with exception of the AUD and NZD) as the sell off across currency markets stalled through trade on Tuesday. While a broader risk off mood continues to permeate market trends the rush to safety slowed forcing the dollar lower against the Euro, Pound, Canadian Dollar, Yen and Swiss Franc. With market fears tempered attentions turned to escalating expectations the FED will cut interest rates in June. Futures showed the likelihood of a rate cut had increased to nearly 80% on Tuesday with just 4% of investors expecting rates to remain in the current band come the end of the year. The correction in interest rate expectations throughout the last month has been largely overshadowed by the broader risk off mood, but leaves the door open for a USD correction if a shift in the current demand for risk arises. The Euro jumped back through 1.0850 to touch 1.0882 while the GBP pushed back through 1.30 and the Yen forced the dollar back below 110.
With little of note on the domestic docket through trade on Wednesday attentions remain squarely affixed on developments in the Coronavirus ahead of prelim GDP data and core durable goods orders Thursday.
Expected Ranges
AUD/USD: 0.6580 - 0.6630 ▼
AUD/EUR: 0.5980 - 0.6090 ▼
GBP/NZD: 1.9500 - 1.9900 ▲
AUD/NZD: 1.0380 - 1.0450 ▲
AUD/CAD: 0.8710 - 0.8800 ▲
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