Aussie continues to outperform peers as restrictions begin to ease

Daily Currency Update

AUD - Australian DollarThe Australian dollar advanced through trade on Monday up 1.2% to touch 6 week highs at 0.6470. Improving risk sentiment helped the AUD sustain the upturn that started in the latter half of last week, outperforming all major counterparts as investors begin to shift their attentions toward a post COVID19 landscape. While we are still a long way from declaring victory against the pandemic that has brought the world to a shuddering halt markets are buoyed by signs we are edging nearer a return to normal as lockdown restrictions are now starting to be scaled back. Having recouped nearly all the losses suffered through March, when panic selling, and widespread uncertainty thrust markets into a sudden risk off environment the AUD now looks an attractive option as attention turn to the economic aftermath caused by the coronavirus. Swift and proactive action in containing imported cases and aggressive social distancing measures helped limit the number of community transmitted outbreaks in Australia softening the devastating health impacts and ensuring, for now at least, Australia has been spared the worst of the pandemic. Our ability to largely combat the virus now makes us an attractive option, when compared with European and North American counterparts. As long as community transmitted cases remain low the domestic economy can gradually be opened up helping limit the impact to GDP and hopefully ease the unemployment burden. While the AUD does not typically perform well in a low growth environment, the coronavirus has changed the rules and in an world where social restrictions are expected to shutter normal economic activity for months if not year, an economy that is able to open at a faster pace than its peers becomes an attractive option as uber loose monetary policy will likely be tightened at a faster pace offering a promising yield return. Having met resistance at 0.6460 we will look for a consolidated break above this handle as a sign the upturn can continue. Having enjoyed a string of higher lows and higher highs through the last month a jump above resistance could prompt a move back through 0.65 and beyond if the risk on mood continues through the short term.