AUD finds short reprieve, but forecasts point to further depreciation ahead

Daily Currency Update

After a tumultuous start to the week price action across currency markets has stabilised and the AUD found support having marked fresh lows below US$0.6250. Risk sentiment improved throughout trade on Tuesday after the Bank of England extended its emergency gilt buying program to include inflation linked gilts. Dysfunction within the gilt market afforded policymakers little choice but to step in a restore order. The AUD climbed back through US$0.63 marking intraday highs at US$.6350 before shifting lower again amid sustained uncertainty. Having given up US$0.63 the AUD opens at US$0.6273 this morning.
With little of note on today’s domestic macroeconomic ticket, our attentions turn to UK GDP, EURO Industrial Production, and US Producer Production data ahead of key commentary from BoE, ECB, and US central bank policymakers. With all eye on the UK and what will happen when the Bank of England removes its emergency backstop this Friday. Fluctuations in the risk narrative and sustained risk aversion will continue to steer direction and ensure the AUD remains under pressure. Having marked a series of lower lows through the last 2 weeks we are now eyeing a break toward 0.62 as the next critical marker of support.