Learn to Trade

Aussie Dollar Heading for Fresh Lows Amidst New Cases of COVID-19

By No Comments

On Friday morning, the Australian dollar is heading to a weekly loss due to the resurgence of COVID-19 cases in Europe and North America darkened the outlook for global growth and commodity prices. 

Lockdowns across Europe led the European Central Bank on Thursday to signal further stimulus, likely in December through more bond purchases and cheap credit for banks. 

Such expectations put pressure on other central banks to ease, if only to stop their currencies from rising and tightening domestic financial conditions. 

The Reserve Bank of Australia (RBA) has acknowledged as much in its recent commentary, citing a need to restrain the Aussie amid a global rush to super-cheap money. 

That is one reason investors are wagering heavily on a rate cut at the bank’s November policy meeting next week, and a move to buying the government debit in the five to 10-year tenor. 

“The market is already well priced for easing by the RBA,” said Tapas Strickland, a director of economics at NAB.” 

“Our latest analysis of how large a QE program needs to be suggested. The RBA would need to buy at least A$143 billion ($101.94 billion) of bonds, which would equate to around A$ billion a month under an 18-month program.” 

Three-year bond futures held just short of all-time highs on Friday at 99.835, implying a yield of 0.165%. The RBA is widely expected to trim its target for this yield to 0.1%, from the current 0.25%. 

Futures for 10-year bonds were at 99.1750 having been nudged off their recent top of 99.2900 by a shift higher in U.S. Treasury yields. 

Analysis generally assume the RBA will want to push yields below those in the U.S., currently at 0.82%, and keep them there as one way to put downward pressure on the Aussie. 

 

Technical Outlook 

  

In the daily charts of AUD/USD, the pair inched up early Friday morning in the Sydney Session. 

The Aussie changed hands at $0.7031, slightly above a three-month low of $0.7002 marked overnight. That left it down 1.4% for the week so far and threatening support around 0.700, a break of which could see a pullback to $0.6920 

Don’t forget to follow and subscribe for more updates about market trends, analysis, forex news, strategies and more!

 

Do you want to learn more about forex trading? Sign up now on our FREE forex webinar and reserve your FREE seats while it still lasts!

 

 

General Advice Warning  

Learn to Trade Pty Ltd (ACN:138178542, AFSL:339557) provides general information and educational courses and materials only. This is not an offer to buy/sell financial products. We do not provide personal advice nor do we consider the needs, objectives or circumstances of any individual.  Financial products are complex and all entail risk of loss. Over-the-counter derivative and foreign exchange products are considered speculative because they are highly leveraged and carry risk of loss beyond your initial investment, hence should only be traded with capital you can afford to lose. Please ensure you obtain professional advice to ensure trading or investing in any financial products is suitable for your circumstances, and ensure you obtain, read and understand any applicable offer document 

 

The information contained herein (“Content”) has been prepared and issued by Learn to Trade Pty Ltd (LTT), and all intellectual property relating to the Content vests with LTT unless otherwise noted. The Content is provided on an as is basis, without warranty (express or implied). Whilst the Content has been prepared with all reasonable care from sources we believe to be reliable, no responsibility or liability shall be accepted by LTT for any errors or omissions or misstatements howsoever caused. No guarantees or warranties regarding accuracy, completeness or fitness for purpose are provided by LTT, and under no circumstances will any of LTT, its officers, representatives, associates or agents be liable for any loss or damage, whether direct, incidental or consequential, caused by reliance on or use of the Content. 

 

You may also like to read:

Please Leave a Comment

Your email address will not be published. Required fields are marked *