Market News & Analysis

Top Story

AUDUSD holds above GFC low

Another night of chaos in equities as the S&P 500 fell by -12%, despite the raft of aggressive easing measures announced by the Federal Reserve and other Central Banks yesterday, designed to support economies, credit and risk markets.

The overnight sell off in equities reflects the view of some that the Fed has shot all of its easing and liquidity bullets before the economy enters recession. As well as fears the introduction of more onerous guidelines and restrictions by individual countries around the Covid-19 outbreak will exacerbate the economic slowdown.   

Forgetting that by bringing forward rigorous social distancing measures and lockdowns, it means countries are likely to reach peak Covid-19 cases earlier than they might otherwise and by definition a turning point sooner than later. Also, that central bank easing and liquidity measures are likely to stay in place for at least the next 12 months and that more fiscal stimulus is on its way.

Those thoughts, however, have failed to provide the beaten up AUDUSD with any respite. Apart from the obvious connection between the AUDUSD and equity markets, there was disappointment amongst participants yesterday that the RBA chose not to act in tandem with the Federal Reserve and the half dozen other banks that announced easing measures yesterday. 

As traders look towards Thursday morning, when the RBA is expected to cut rates by another 25bp and announce the start of its Quantitative Easing (QE) program, the Global Financial Crisis 2008 low at .6007 is shaping as a type of “line in the sand” for the AUDUSD.

While above .6000c a recovery back towards .6600c is possible, with a move above .6330 confirmation that this rally is underway. However, should the AUDUSD break/close below .6000c, there is very little in the way of support until the low 50’s.

AUDUSD holds above GFC low

Source Tradingview. The figures stated areas of the 17th of March 2020. Past performance is not a reliable indicator of future performance.  This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation

Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.