Aussie drifts lower as risk appetite falters

Daily Currency Update

AUD - Australian DollarThe Australian dollar drifted lower through trade on Thursday, having failed to extend the weeks early uptick and push through 0.70 US cents. The AUD traded sideways for much of the domestic session, maintaining a 25 point range and bouncing between 0.6973 and 0.6996, before shifting back toward 0.6950 as risk appetite faltered. Markets shifted focus toward safe haven assets, following a ruling by the US supreme court that will allow New York prosecutors access to President Trump’s financial records. Equities and risk correlated currencies were forced lower in the minutes following the verdict as the possibility for further political instability added to the environment of uncertainty. Risk continues to drive direction and while the record levels of fiscal and monetary policy support have helped foster a positive risk backdrop, the uptick in COVID-19 cases and added geopolitical uncertainty are weighing on upward risk-on moves. While we expect the record centralised support packages will continue to support the global economy and the AUD, an extension beyond 0.70 requires a renewed risk driven push. Having surged through April and May, broader optimism has stalled and ranges across currency markets have narrowed considerably. We anticipate the AUD will remain range bound through the short-term, bouncing between support and resistance handles as the ebb and flow of risk demands follows the shifting COVID-19 led narrative.