Another day, another banking crisis forces AUD back below US$0.66

Daily Currency Update

The Australian dollar recovery faltered through trade on Wednesday, sinking back below US$0.6650 amid new fears surrounding the health of the global financial system. Markets were plunged back into turmoil after Credit Suisse auditors identified and disclosed “material weaknesses” in the bank's reporting controls. With stocks plunging, panic intensified following reports the bank's largest Shareholder (Saudi National Bank) rejected calls to provide capital should funding needs arise. With the bank seeking a liquidity backstop and markets in freefall, the Swiss National Bank has stepped in, announcing it will provide liquidity “if necessary”. Just as confidence was beginning to recover, the shock of last week’s Silicon Valley Bank and Signature Bank collapse has investors again being thrown to the wolves. Bank stocks plunged, leading losses across key equity indices while the 'risk-off' move has forced the AUD toward intraday lows at US$0.6590.

A stacked macro docket headlined by Australian employment data and the European Central Banks' latest policy announcement should offer key insights into future monetary policy expectations. However, attentions remain firmly affixed to developments in this latest banking crisis with macro data likely to have little impact until the dust settles. We are keenly attuned to any news surrounding Credit Suisse and risks connected with other larger banking institutions.