April 8, 2020 — 2 min read
The AUDUSD opens at 0.6229 and the NZDUSD opens at 0.6018 this morning.
Another day, another grind higher for risk currencies. Australia passed a AUD $130B jobs package, which more than offset the downgrade in outlook to their credit rating. Their total response is over 16% of GDP, which although large, will be seen as more than justified if Australia gets on top of their cases quickly, and manage to forestall a major recession.
There are reports out of Europe that their finance chiefs have failed to reach a deal over the virus response. This is more foreshadowing of the problems Europe is going to have over the coming months. There has always been a bit of a North vs. South divide, as the European economies are fairly different in Italy, Greece and Spain, compared to Germany and France for example. We have been through bail out talks before, and economic austerity imposed on the Southern countries. Remember it is not like their economies were booming heading into this. The closer we get to the end being in sight, the more the market will focus on how individual countries are going to get out of it. It is hard to see the Euro performing well under this microscope.
Remember, also that although we are coming into the long Easter weekend, we still have a lot of data coming in, such as Unemployment claims, US CPI, and numerous speakers. Four days out of the market isn’t as long as it was a few weeks ago, but it is still a long time to hold a risky position. Therefore we wouldn’t be surprised if risk currencies like the Australian and New Zealand Dollars sold off late in the day.
Global equity markets are generally up, Dow +3.1% S&P 500 +3.4%, FTSE -0.5%, DAX -0.2%, CAC +0.1%, Nikkei +2.1%, Shanghai -0.2%.
Gold prices are off slightly to USD$1,648 an ounce. WTI Crude Oil prices are up 7.9% to $26 a barrel.
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