Currency Update - Monday 30th March 2020
AUD
The resurgence of the AUD continued into the weekend as
markets trade more positively, US equity markets finishing last week up close
to 16%. There is somewhat of a disconnect between how financial markets
are behaving when compared to global economies increasingly chafing under more
restrictive lockdowns. The US’s death toll doubled over the weekend reflecting
the rapidly escalating pandemic that will undoubtedly add pressure to the
various US states that have so far not instituted lockdown policies seen in
other countries. Markets continue to trade with invigorated levels of optimism,
risk assets recovering recent losses as investors are buoyed by a combination
of monetary and fiscal stimulus. In Australia the latest lock down measures
seem to be working with the infection rates appearing to show signs of a plateau
(fingers crossed and touching wood!). Nothing on today's economic calendar,
however it's expected that the government will announce wage subsidies at some
stage today.
USD
The AUD is continuing to lift against the USD with markets
trading the pair at 0.6140 at time of writing. US equities are lifting with a
heroic comeback of late though the US Dollar Index is rapidly falling. This may
be caused by the massive stimulus packages recently rolled out or perhaps a
sign of a more risk on mode for investors but either way for at least the time
being the AUD has recovered much of its lost value of late. Looking ahead
markets will need to sustain what is likely another blow to stability as the US
ISM Manufacturing PMI is set to print a disastrous figure in addition to
another round of jobless claims with many pundits expecting the recent 3.2m
figure to be dwarfed by this week. Whether the risk on sentiment we’re seeing
lifting risk assets such as the AUD will survive this week is anyone’s guess.
EUR
AUDEUR trade has flattened significantly of late with the AUD
continuing to trade fairly flatly around the 0.55 handle. Markets are
significantly more calm than they have been of late. European equities continue
to erode in value with market conditions in the Zone significantly worse than
their US counterparts. This isn’t surprising as the scale of the pandemic and
the level of governmental response has been far greater there since it became
the epicentre of the outbreak. European equities finished up last week down 5%
and with no end in sight for many European countries we can expect further
losses to accumulate.
GBP
The Pound continues to eat away at the AUD making small gains
with markets trading the pair at 0.4940 at time of writing. Little in the way
of news but the recent fall in the USD may encourage more bids for Pound
Sterling as investors seek stability. The UK was hit over the weekend by news
that Boris Johnson was confirmed positive with Covid 19 however he has declared
his intention to continue to work while he recovers within self isolation. No
other data to report.
NZD
AUD/NZD is trading higher with the AUD finding bids all the way
up to as high as 1.025. The pair is being traded just below 1.02 at time of
writing however expect further volatility between the pair as market sentiment
should rapidly change this week as the pandemic escalates. No other data to
report.