The Australian dollar is flat against the US dollar on Monday.
The exchange rate was little moved since both currencies were making strides on Monday as top gainers.
The Aussie benefited from the announcement of new fiscal measures in Australia. The US dollar was seeing a technical snapback from big losses last week after a bullish note from Goldman Sachs.
Australian dollar versus US dollar was higher by 1 pip (+0.01%) to 0.6166 with a daily range of 0.6113 to 0.6184 as of 5pm GMT.
AUD/USD moved in a 50-pip range between 0.612 and 0.617 on Monday after a massive 6.33% gain last week.
Australian dollar boosted by fiscal stimulus
The rebound in the Aussie over the past fortnight might have been stronger were the Australian government to have been more proactive in preventing possible problems the virus could cause domestic Australian economy. The news that the government will support wages for those forced out of work brings it more into line with actions from other nations.
Australia will use A$130 billion over the next 6 months to make up to $1500 monthly payments to employees in order to ‘support jobs and aid businesses’. Prime Minister Scott Morrison and Treasurer Josh Frydenberg framed the new policy as a kind of “hibernation package” to help pay employees of businesses that had shutdown rather than to subsidise employees who are not coming to a still active business.
US dollar rebounds on bullish Goldman note
Last week was one of the steepest weekly declines since 2009 for the dollar so some kind of snapback seemed likely in the new week. The Canadian dollar (USD/CAD) saw the biggest losses against the dollar due to a fresh 18-year low and sub-$20 per barrel print in WTI crude oil.
Goldman Sachs has recently been suggesting we may be on the verge of direct FX intervention by US authorities. And the mere fact that Goldman is saying it makes it more likely it will happen given the banks strong following and influence in financial markets. Goldman noted: “The real trade-weighted Dollar has perhaps 3-5% upside from the latest highs, in our view.”
