The Australian Dollar is on the defensive after another night of risk in the markets due to elections, COVID and a sell off in commodities. The AUD/USD sold off 1.20% overnight after fears of more outbreaks, and further shutdowns in both the USA and Europe with COVID infection numbers increasing to similar numbers we seen in March when the real panic set in. Reports from both Germany and France is that they are considering lockdown action. Late Wednesday, Germany’s Chancellor Angela Merkel reached a deal for a one-month partial lockdown with the state premiers, starting November 2 and will last until end-November Last week we mentioned a support level around 0.7010 and this is still where we would hope we could stay above, however with the election looming and investors flocking to both the US Dollar and Japanese Yen as safe haven's we may see more pressure on the AUD in the coming days.
The Australian dollar also suffered off the back of sell offs in commodities, with Oil down 4.25% overnight, Copper also fell 0.5% and even with slightly better than expected inflation figures from Australia, the markets are looking very nervous and the AUD is suffering at this point.
Next week will see the next RBA meeting take place on Tuesday. According to the RBA rate indicator, the table below highlights how market expectations of an interest rate decrease at the next RBA Board meeting has evolved in recent days.
GBP NEWS
The GBP to AUD has sat within a tight range of $1.79-1.84 since June, we have seen a slight upward trend in recent weeks after movement in Brexit talks, yes the same Brexit talks that started 4 years ago. It has started to move toward the higher end of this range (1.84) however further upside appears elusive, as markets are weighing in chances of a UK lockdown, especially after the Kingdom reported reports 24,701 new COVID-19 cases a day before.
Thursday will see trade talks on-going between the EU and US and what those types of arrangements look like moving forward for the UK.
As always, the biggest driver of volatility in the markets is uncertainty and we have so much of it around currently. When looking at the outlook for the AUD, USD, GBP or EUR we currently have so many different risk events on the horizon.
Feel free to call and have a chat around these situations, market moves can work for or against you. Either way, we can help you navigate options that could protect you or your business from currency exposure in these uncertain times.
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