Currency Update - Friday 3rd April 2020

AUD

The big news overnight was the US Jobless Claims which exceeded
the already high expectations, printing at a whopping 6.6mio claims. This is
dramatically higher still than the previous week’s record print of
3.2m. To offer a bit of perspective around the labour market effects of
Covid-19, a 'normal' jobless claims number is around 200k. Immediately
after the jobless claims number the market immediately began selling risk off
which hit risk assets and currencies hard including the AUD. The AUD found
some supports in a huge bounce in the oil price which jumped up 22% after
reports came in that Saudi Arabia and Russia would cut their oil production by
10 million barrels per day. Chinese Services PMI due for release early this
afternoon, a rebound is expected as China appears to come out the other side.

USD

After the US jobless claims was released we saw a heavy sell off
of the AUD as traders shed risk, AUD immediately fell from 0.6080 down to
just above the 0.60 handle. The bounce in oil helped the AUD and we’ve traded
back up to 0.6065 at time of writing. It may seem perplexing why the USD would
rally after such damaging US economic data but whenever there is significant
volatility or catastrophic events markets will react by shedding their risk
positions and buying up safe havens and the USD is chief among them. The US
Dollar Index managed to lift by 0.8% though came off after the bounce back in
oil made risk a more palatable proposition. In the past 24 hours the confirmed
cases of Covid-19 in the US increased by 13.4% which is less of an increase
than previous moves but in absolute numbers it’s still a massive increase and
one that puts the US on schedule to have 1 million confirmed cases by
mid-April. Tonight we get the official Non-Farm Payroll numbers and if the
Jobless Claims are an indication of what to expect, it is sure to be a
depressing number and could potentially undermine AUD from an
increased risk perspective.

EUR

AUD opens about 0.5% higher this morning at 0.5585 after
regaining overnight losses throughout this morning. Prompting Euro weakness was
not only the jobless claims figure but also the escalating pandemic in
Spain which had a 24 hour death toll of 950 and the number of total cases
moving beyond 110k. Spanish unemployment spiked by 302.3k in March, the highest
increase on record and numbers we should expect to see in other European
countries as the pandemic continues its relentless spread. In addition,
politicians from both France and Italy made calls to the EU for a more robust
fiscal response to help alleviate ailing European economies. Services PMIs from
the EZ due tonight.

GBP

Similar behaviour here to AUDEUR, The Aussie trading
at 0.4889 at time of writing. We dipped to 0.48 flat after the US jobless
claims but with the bounce in oil we managed to recover. In the last 24 hours
the UK death toll skyrocketed by 563 - a 31% increase in the total number dead.
As far as confirmed cases it also jumped with over 4000 new diagnosed Covid-19
cases and between the two this is starting to wear on the Pound. Services PMIs
due from the UK tonight.

NZD

The AUD is holding fairly steady in the last 24 hours against
the Kiwi after an up and down overnight session following the US jobless claims
and oil bounce. The pair is now traded at 1.0246 at time of writing and we
should expect the up and down to continue as the Antipodeans battle through the
turbulence of risk sentiment.