AUD uptick continues as USD weakness helps drive gains

AUD - Australian Dollar

The Australian dollar extended last weeks upturn, breaking above 0.7750 to mark new highs at 0.7780. The US dollar remains under pressure as a correction in treasury yields and renewed demand for risk help drive gains across commodity currencies and the Euro. With little of note on the macroeconomic ticket and no central bank commentary to steer direction the pace of appreciation slowed through Monday with investors reluctant to extend outside recent ranges. Volatility across currency markets remains low as a lack of conviction plagues analyst and traders. COVID-19 continues to wreak havoc across developing countries, with Brazil and India both struggling to contain resurgent outbreaks. The global economic outlook remains clouded as the timeline to recovery is unclear forcing investors to the sidelines in lieu of a definitive update/shift in the recovery.

Key Movers

The US dollar fell through trade on Monday, marking a sixth consecutive daily depreciation and 2 % correction through the last month. While the broader economic outlook remains clouded an amendment across US treasury yields and definitive shift in optimism surrounding Europe’s vaccine program has prompted renewed demand for risk assets. Despite a correction overnight equities remain near record highs, dragging commodity currencies higher across the board.

The Euro pushed above 1.20, while the Japanese Yen marked a 6-week high and the GBP outperformed all counterparts, extending beyond 1.39 and 1.3950, closing in on 1.40.

With little of note on today’s macroeconomic ticket we expect volatility across currency markets will remain narrow. Recent US dollar weakness is expected to continue, albeit the pace of correction should moderate through the week ahead.

Expected Ranges

AUD/USD: 0.7630 - 0.7820 ▲

AUD/EUR: 0.6390 - 0.6520 ▼

GBP/AUD: 1.7780 - 1.8120 ▲

AUD/NZD: 1.0770 - 1.0830 ▼

AUD/CAD: 0.9650 - 0.9780 ▲