Aussie driven lower as US bounce drives shift back to fundamental trading patterns

Daily Currency Update

AUD - Australian DollarThe Australian dollar dipped back below 0.65 US cents through trade on Tuesday, giving up 1.6% and touching intraday lows at 0.6470. With little appetite for risk across the broader market the AUD came under pressure after the White House announced stimulus and fiscal support measures to combat the slowdown driven by the coronavirus. Affirmative policy action helped stage improvements across treasury yields and US rates easing broader market concerns and alleviating the panic that overcame markets through trade on Monday. Having found a modicum of stability through the past 24 hours, corrections in the USD have prompted a shift back toward normal trading patterns, with the AUD now responding to standard fundamentals within the risk off environment. The tip toward global recession and the push to safe haven assets weighed on the AUD through trade on Tuesday and we anticipate risk will remain broadly skewed toward the downside through the weeks ahead. With little of note on today’s domestic docket attentions remain affixed to the evolving impacts of the coronavirus. While the number of new cases being reported in China each day is falling the global spread, specifically in Italy, Iran and South Korea remains largely out of control, suggesting it will be some time before COVID19 is contained. As we edged nearer a domestic and global recession, we anticipate the AUD will test lows triggered in Monday’s flash crash at 0.6315/0.63.