Currency Update - Friday 6th March 2020

AUD

It appears that the optimism gripping the markets recently was short lived and we
finish up the week with risk sentiment taking a sharp turn lower overnight.
Coronavirus infections were increasing all across the globe which led the way
for risk assets to take a hit with US equities taking a plunge and the
Australian Dollar finding itself under bidding pressure. Australian trade
balance figures came out positive with the reading exceeding expectation by
$410m with a reading of $5.21B which helped buoy the AUD up to the start of the
US session. The overnight session gave the AUD more trouble as fear overtook
optimism in the markets and investors moved to trim risk positions. Ahead today
we have Retail Sales which in the current environment is unlikely to be a market
mover. No other data to report

USD

The negative turn in risk sentiment put the AUD on the backfoot in the overnight
session, coming off the highs of the day and down back below 0.66. We’ve since
crept back up above the 0.66 handle and are trading at 0.6618 at time of
writing. On the data front US weekly jobless claims came in at 216k.
Durables goods orders came in at -0.2% in January (as expected) with factory
orders falling by 0.5% (-0.1% expected). US equities found themselves taking
heavy losses of over 2% before the close. Looking ahead we have US non-farm
Payroll data out to finish up the week which Macquarie Bank is anticipating to
show a lighter reading after a robust January that was likely boosted by mild
temperatures.

EUR

The AUD was under pressure and taking losses against the EUR overnight with markets trading the pair down
to below the 0.59 handle. There’s little appetite for risk and European equity
markets quickly found themselves a short sellers favourite with bonds rallying.
With little data out investors are glued to news of the coronavirus and the
economic fallout to follow. No other data to report.

GBP

Pound Sterling continues to bounce back against the
AUD’s rally last week, recapturing much of the losses and pushing the AUD back
closer to just above the 0.51 handle. BoE Carney provided an update overnight
advising that they are coordinating a response with Treasury and that BoE will
take all necessary steps to support the UK economy throughout the outbreak. No
other data to report.

NZD

We open lower this morning against the Kiwi after the NZD regained some of the
recent losses pushing the AUD back down beneath the 1.050 handle. The AUD is
attempting to push higher at time of writing and with the NZD under as much
pressure as the AUD if we do sentiment lift we can expect the AUD to open
strong.