Currency Update - Monday 11th February 2020

AUD

The Australian Dollar remains under heavy selling pressure with
volatility gripping the market as investors continue to worry about the ongoing
Coronavirus outbreak and its effect on the global economy. Despite a grim day
of trading for the Australian Dollar yesterday US equities during the overnight
session did well which may indicate there remains some appetite for risk.
Traders on Wall Street are cautiously optimistic as they are buying the market
even though the coronavirus crisis is deepening. The Australian dollar managed
to pick itself up from the lows endured yesterday following some positive
Chinese CPI data which blasted past expectations with a 5.4% jump (ahead of
expectations of just below 5%). Producer prices ended a six-month deflationary
bout and rose 0.1% year-over-year. The Australian Dollar found some buyers
following the news however quickly found itself under selling pressure again
once the American session began. Ahead today we have a quieter calendar with no
significant Australian data.

USD

The Australian Dollar opens marginally higher this morning after
yesterday’s historic 10-year lows against the USD with markets trading AUD/USD
at 0.6684 at the time of writing. Despite quickly finding bidding interest
following some strong Chinese data the overnight session featured the Aussie as
a seller’s favorite to push us back down below 0.67 once again. Markets are
more volatile at present with markets struggling to price the economic impact
of the coronavirus. Looking ahead today we have a fairly light day on the data
front though the overnight session will feature Fed Chair Powell delivering a
monetary policy report.

EUR

Euro weakness has helped the Australian Dollar log a strong day
and night of trading to move higher with markets trading AUD/EUR at 0.6127 at
time of writing. European equities closed modestly lower as fears over the
coronavirus impacted the stock market. The losses endured overnight are a
continuation of last week’s falls as dealers lock in the profits they made from
last week. There was some news from Germany with Annegret Kramp-Karrenbauer
resigning as leader of the Governing CDU party. She was expected to be in the
race to replace Merkel. On the data front Italian IP fell by 2.7% in December
with the EZ Sentix survey for February showing investor confidence at 5.2, down
from 7.6 in January. Looking ahead we have nothing scheduled for release until
early tomorrow morning with ECB President Lagarde will provide opening remarks
before the European parliament. Expect a flatter day of AUD/EUR trading.

GBP

The Aussie Dollar came under significant selling pressure
overnight which saw a fall from 0.52 down to a low of 0.5162. Markets found
some bidding interest for the Aussie to help it lift from the lows to where
markets trade the pair now at 0.5176. Numerous headlines about the coronavirus
outbreak with a medical practice in the UK closing after a staff member tested
positive while British Airways cancelled all flights to Beijing and Shanghai
until April 1st. Ahead tonight we have Pound Sterling GDP and Manufacturing
Production data before BoE Gov Carney speaks in the early morning.

NZD

The Australian Dollar has added to yesterday’s gains with a move
higher against the Kiwi with markets trading AUD/NZD at 1.473 at the time of
writing. The Kiwi has suffered terribly with the coronavirus hitting financial
markets and the Chinese CPI data yesterday helped find some buying power for
the Aussie. No data ahead today.