AUD – Australian Dollar
AUD progressed higher on trade Monday, testing 0.61 cents US, risky assets benefiting from renewed support on optimism. Europe could start easing containment measures as the Spain and Italy seem to have gone through the worst of the COVID19 pandemic. Spain reported its lowest number of new cases in more than a fortnight, while the death rate fell for the fourth consecutive day and Italy continues to experience a decline in new cases and daily deaths. As attention now shifts to the United States as the new epicenter, President Trump has promised Americans that there is light at the end of the tunnel, as social distancing measures appear to be slowing the pace of community transmission. After remaining largely linked to the range for much of the national session, bouncing between 0.5990 and 0.6035, the AUD climbed touching peaks overnight at 0.6105.
Uncertainty and the demand for risk continue to drive, driving the AUD higher in the short term. Although there seems to be some improvement in the longer term fight both in the world and in the United States, we are still 2-4 weeks from the possible peak of the curve, which means a period of increased volatility and a fluctuating risk profile as markets try to adapt to the changing environment favored by the pandemic.
The attentions today transform the RBA’s policy meeting, the first since the adoption of emergency EQ measures. We anticipate that the RBA will refrain from adding to its new QE program. Having demonstrated an aversion to progressing towards negative interest rate markets, he will be very attentive to the rhetoric attached to any post-meeting comment as a marker to guide a longer-term orientation.
Safe Havens suffered from trade on Monday as improved risk sentiment helped support demand for risky assets and commodity currencies. Despite a correction in oil prices, the Norwegian krone led the majors to advance in all areas while the USD, CHF and JPY all fell and the euro struggled to make a significant movement in both ways.
The dollar index fell 0.1% while the JPY and CHF fell 0.5 and 0.1 respectively. The pound also struggled, falling below 1.22 after British Prime Minister Boris Johnson was transferred to intensive care, a precautionary measure having been confirmed. After being hospitalized over the weekend, Johnson’s symptoms have apparently worsened, which worries the markets as to who will guide the country into this chaos if Johnson is weakened for a long time.
Today, attention remains resolutely attached to the evolution of the pandemic, with a fluctuating demand for risk. Boris Johnson’s condition reminds us of the blind nature of this virus and the risks it still poses.
AUD / USD: 0.5930 – 0.6180 ▲
AUD / EUR: 0.5530 – 0.5720 ▲
GBP / AUD: 1.9920 – 2.0520 ▼
AUD / NZD: 1.0180 – 1.0320 ▲
AUD / CAD: 0.8490 – 0.8630 ▲