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Currency Market Analysis

Sep 23, 2020 | Currency Market Analysis

Global Themes

Aussie at two-month lows as “triple threat” hits

• Aussie drops to two-month lows
• RBA speech weighs; US politics also drives losses
• RBNZ in focus at midday AEST

Triple threat

The Australian dollar was sharply lower overnight as the local currency was hit by a “triple threat” of market pressures.

A stronger US dollar, renewed US-China tensions, and potential loosening in local monetary policy all weighed on the Aussie dollar.

The US dollar was stronger as markets moved into safe haven currencies ahead of the US election. US bond yields also climbed.

US-China tensions remained heightened as US President Donald Trump used a UN speech to blame China for the spread of COVID-19.

Finally, yesterday’s speech from Reserve Bank of Australia assistant governor Guy Debelle signalled that all options remain on the table ahead of the 6 October policy meeting.

Safe havens gain

The AUDUSD slumped 0.5%.

The AUDUSD fell to the lowest level since 27 July.

The Aussie was weaker in most other markets with the AUDJPY also down 0.5% as markets favoured safe haven currencies.

The AUDEUR dropped 0.2% as it extend losses from the major market resistance at the 2020 highs.

RBNZ ahead

The main focus today is on the Reserve Bank of New Zealand meeting at midday (AEST).

Most forecasters expect the RBNZ will hold steady ahead of next month’s NZ election.

Also due today, a series of PMI readings from Australia, Japan, Europe and the US. These PMI numbers provide the most up-to-date reading of the global economy.

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