23rd June 2020 - AUD/USD consolidates around 0.6900 after snapping four-day losing streak


Good Morning,

Market Headlines

US equities rose moderately overnight with the S&P 500 gaining 0.6%, while the NASDAQ rose by 1.1% to start the week. On the commodities front, Brent rose 2.1% to $43.10, copper up 1.7%, iron ore dropped 1.3% to $101.30, and gold finished up 0.7%. US 2yr treasury yields ranged between 0.18% and 0.19%, while the 10yr yield rose to 0.71%.

Currencies

The US Dollar Index closed 0.6% lower on the day

EUR traded between 1.1190 to 1.1270

USD/JPY ranging between 106.80 and 107.00

AUD rose from 0.6860 to 0.6923

NZD rose from 0.6420 to 0.6494

AUD/NZD ranged between 1.0630 and 1.0665

AUD Thoughts

  • AUD/USD regains lost ground and rallies 1.5% to 0.6920 area.

  • The AUD appreciates on the back of RBA’s comments and US dollar weakness.

The Australian dollar is being one of the best performers of the G-10 currencies today, staging a 1.5% rally against a somewhat weaker US dollar. The Aussie has bounced from 0.6805 lows to pare losses from four consecutive negative days and return to levels above 0.6900.

The RBA and a softer dollar lift the Aussie

RBA Governor Lowe has buoyed the AUD on Monday, discarding that the recent strength of the currency might pose a problem to the economy. Lowe has also assured that Australia has "a fantastic set of underlying fundamentals" and that therefore, the economic impact of the COVID-19 pandemic will not be as bad as expected.

This has fuelled AUD demand further which has also been favoured by US dollar weakness. The decline of US treasury yields, with the 10-year bonds down nearly 3% on the day has weighed on the dollar, which went south against its main peers.

Event Risk Data Today

Japan: The Jibun Bank manufacturing and services PMIs.

Taiwan: May Industrial Production

Germany: PMI Data, expected to show signs of improvement across manufacturing and services.

Eurozone: Markit PMI data continues in the Eurozone overnight

US: New Home Sales June Markit PMI, May new home sales, June Richmond Fed manufacturing

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