Risk sentiment drives AUD back through 0.60 US cents

AUD - Australian Dollar

The Australian dollar pushed back through 0.60 US cents through trade on Thursday, buoyed by a sustained run in improved risk sentiment. Fears that crippled financial markets through much of the month to date continued to ease, as investors confidence is bolstered by the stimulus backdrops rolled out by central banks and governments around the world. This uptick in risk demand has been key in fostering the AUD recovery to date as investors unwind USD shorts and we edge nearer fair value estimates. Touching intraday highs at 0.6081, the AUD is up over 2% and appears set to test moves above 0.61 should the current risk on move continue.

Attentions remain squarely affixed to the ongoing developments and spread of the coronavirus and as China’s recovery gathers pace there is renewed optimism we will push through the other end of this crisis. China’s recovery bodes well for the AUD as our largest trading partner is vital driving demand for Australian commodities and exports. With factories re-opening and production escalating the focus now shifts to re-building global demand. With Europe and the US mired in the height of the epidemic demand side softness continues to plague the global economy. Watch resistance on moves approaching 0.6090-0.61 with supports on moves approaching 0.5730.

Key Movers

The US dollar retreated for a third consecutive session as risk sentiment continues to improve and markets look to correct the USD overshoot. With liquidity pressures easing, investors are unwinding USD shorts forcing the greenback lower against most major counterparts. While markets are largely ignoring dire macroeconomic indicators, yesterday's US jobless claims was keenly anticipated as a marker that could drive further stimulus measures. US unemployment filings rose at an unprecedented pace with more than 3 million Americans registering for unemployment, prompting investors to begin pricing in a need for additional fiscal support. With the US now surpassing China with the largest number of COVID-19 cases worldwide there are fears the angst across the country and economy extend well into the second half of 2020.

The euro jumped over 1%, pushing through 1.10 while the dollar slipped back below 110 Japanese yen. The Great British pound continued its recovery rallying nearly 2.55 and back through 1.20, touching 1.2174 while the Canadian dollar pushed back through 0.70US cents.
While attentions remain squarely affixed to the unfolding coronavirus pandemic there is scope for further US softness as risk appetite improves. However, we expect the USD to remain largely well bid as the pall of uncertainty cast by COVID-19 and month /quarter end rebalancing drive demand for the worlds base currency.

Expected Ranges

AUD/USD: 0.5730 - 0.6150 ▲

AUD/EUR: 0.5330 - 0.5580 ▲

GBP/AUD: 1.9530 - 2.0450 ▲

AUD/NZD: 1.0080 - 1.0220 ▼

AUD/CAD: 0.8310 - 0.8550 ▲