Market News & Analysis
COVID-19 “good news” to help the AUDUSD?
Tony Sycamore April 23, 2020 6:40 AM
At a briefing this morning, Australian Prime Minister Scott Morison provided a “good news” update to the nation after only four new COVID-19 cases were reported nationally yesterday. At the current rate of decline, COVID-19 could shortly be eliminated in Australia, prompting the Prime Minister to float the idea social distancing restrictions may be eased in three weeks.
For those workers, not reliant on international travel and who are looking forward to a return to a more normal work/life balance, the date to pencil into diaries is the 14th of May.
This is just two months after the Federal Government announced a stimulus package now totalling $200 billion or about 10% of GDP. While at a similar time, the RBA cut interest rates to 0.25% and commenced a quantitative easing program. All designed to support workers and the economy during a 6-month lockdown period.
Coming on top of this, Treasurer Josh Frydenberg reported today the ATO had approved 456,000 applications for early access to superannuation, with the average withdrawal "around $8,000" which equates to $3.8 billion.
My point is this. There is now a lot of stimulus designed to support the economy into mid-September some of which may not be needed. If this turns out to be the case, the easiest stimulus tap to “turn off” would be the RBA’s quantitative easing program which should be supportive of the AUDUSD.
This is likely to be a story for next month. In the short term, the AUDUSD continues to be driven by risk sentiment as seen by the price action over the past 48 hours. The important levels to watch are support at .6220/00 and resistance .6450ish. I would see a break of either of these levels as a good guide as to where the next 250 points reside.
Keeping in mind, should the AUDUSD hold above support at .6220/00 and then break/close above .6450ish it would suggest the rally can extend towards medium-term resistance at .6670/.6720 which is our preferred sell zone.
Source Tradingview. The figures stated areas of the 23rd of April 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
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