AUD/USD: Coronavirus Case Slowdown Aids Aussie

The Australian dollar was up against the US dollar on Wednesday as easing fears over the coronavirus and a decision to keep interest rates in New Zealand steady shored-up confidence across Australasia. Elsewhere stock markets in Australia and the United States were rising on improved risk sentiment.

AUD/USD was higher by 30 pips (+0.45%) to 0.6743 with a daily price range of 0.6712 to 0.6750 as of 3pm GMT. 0.67 is still holding as key support but gains are being capped at 0.675, keeping the exchange rate in a 50-pip range. Today’s gains take the weekly total to +1.03%.

AUD high on par with NZD

A rally in the New Zealand dollar added credence to the idea of an Asia-Pac recovery across FX markets following a very difficult period. The Aussie is holding just above decade lows against the US dollar, so the idea that interest rates will at least hold at current levels is offering some support to the region’s currencies. The New Zealand dollar saw its largest one-day price swing of the year after the Reserve Bank of New Zealand (RBNZ) left rates unchanged. RBNZ Governor Orr also took a more constructive view on the New Zealand economy than had been expected.

A slowdown in the number of coronavirus cases is being taken as a sign that the demand-dulling effect of the outbreak will be limited. The Aussie dollar, as well as the Kiwi dollar, have been under pressure because of close trading relationships that Australia and New Zealand have with China.

USD down ahead of Powell’s commentary

Federal Reserve Chair Jerome Powell is expected to make similar commentary to the US Senate today as he did to the Congress on Tuesday. Powell said the Fed is confident in the US economy and sees the removal of trade uncertainty as a positive. However, he also warned on the potential negative effects of the coronavirus, which investors took to mean the Fed might be prepared to lower interest rates to protect the US economy. Questions from Senator Elizabeth Warren, who has held some important finance-related positions in government and is now a Democratic Presidential candidate could be a highlight.

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