Market Update: The AUD Opens at 0.7125 and the NZD Opens at 0.6643

It’s been a big day for the Aussie and Kiwi dollars, and what goes up must, well, keep going up? Both currencies have broken out of their ranges over the last few weeks and extend to their highest rate since January for the Kiwi and since April 2019 for the Aussie. The Europeans managed to agree on a stimulus deal, and in the words of the German Economy Minister, the likelihood of a gradual economic recovery has enormously increased. Rather than specifically helping the EUR, this has buoyed global risk sentiment, and as ever, the AUD and NZD are beneficiaries of this.

What is also happening is momentum. The AUD and NZD have made large moves, and when currencies hit large levels live this, a lot of traders have stop losses above the highs. This creates more buying pressure, and is why you can get such a sharp move. As we have seen we have been range bound with little movement for a while - when the range is finally broken, you can get a prolonged move.

The RBA’s Lowe also added fuel to the fire, or rather extra kindling to the pile of wood by saying the Aussie was “broadly in line with the fundamentals”. This point could be interesting to watch next month, but it is a bit of a stretch to think in this environment that the RBA would actually intervene to do anything to get the AUD back down even if it wasn’t In line with fundamentals. However, the market is giving him credit for now, and taking it as a green light that the RBA will not get in the way of the Aussie for now.  

Global equity markets are higher. Dow +0.6%, S&P 500 +0.2%, FTSE +0.1%, DAX +1.0%, CAC +0.2%, Nikkei +0.7%, Shanghai +0.2%. 

Gold prices are up 1.2% to USD$1,840 an ounce and WTI Crude Oil prices are also up 2.6% to US$41.8 per barrel.