Compass Global Markets' Blog

Market Update - 13th May 2020 - AUD Takes Breather After Sensational Recovery

Posted by Patrick Downes on May 13, 2020 at 9:06 AM

Please note that the commentary below is factual information provided to a group of readers as a web blog, and where an opinion is expressed by the author, it is GENERAL ADVICE only.

AUD Stalls After Stellar Recovery:

The AUD has taken a well earned breather after a stellar run from 0.55 back to 0.65 vs. the Greenback. AUD/USD hit a 17 year low of 0.5505 on March 19 but has since recovered a whopping 10 cents or 18% as global markets cheered on government stimulus, QE and Australia's remarkable ability to avoid the worst of the Covid19 Pandemic.

AUD/EUR paints a similar picture up nearly 20% from a low of 0.5040 on March 19. Earlier this week saw the first stage of restrictions lifted across the country and it'd be fair to expect a further lifting of restrictions as the month wears on and assuming new case numbers remain low. All of this should be bullish for the AUD vs. the EUR, GBP and USD, particularly given the dire situation across the U.S and parts of Europe and the U.K.

Strategy For Importers:

I continue to think the AUD will stay above the lows published in March and would be hopeful we can test 0.7000 before the end of the year. This however doesn't suggest importers should sit back and relax, as market corrections will continue to occur which will drag the AUD lower with it.

My suggestion is Importers should continue to book Forward Contracts as larger orders become due.

AUD EXCHANGE RATES:

AUD/USD – 0.6444

AUD/GBP – 0.5247

AUD/EUR – 0.5935

AUD/NZD – 1.0612

AUD/JPY – 69.097

OTHER MARKETS:

All Ords (XAO) – 5,497

Gold – A$2,631/oz

Silver –  A$23.91/oz

Oil – US$25.62 barrel

DATA RELEASES TODAY:

AUD - Westpac Consumer Sentiment at 10.30am

AUD - Wage Price Index q/q at 11.30am

GBP - Prelim GDP q/q at 4.00pm

USD - Fed Chair Powell Speaks at 11.00pm

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Patrick Downes

Senior Corporate FX Dealer

Phone Patrick - 0431 278 632 

  Email Patrick: patrick@compassmarkets.com

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 DISCLOSURE AND DISCLAIMER - GENERAL ADVICE WARNING
The information provided in this report has been prepared without taking into account your particular objectives, financial situation or needs. You should consider whether our products are appropriate for you and read the FSG and PDS which are available on this website.
This report and must not be copied, either in whole or in part, or distributed to any other person.
All references to prices, amounts and currency are in Australian dollars unless otherwise noted.
This report is provided for Australian residents only and is not intended for use by residents of any other country.

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