Commodity Currencies Rally As Coronavirus Fears Ease
07 Abril 2020 - 12:58AM
RTTF2
The commodity currencies such as the Australian, the New Zealand
and the Canadian dollars advanced against their major counterparts
in the European session on Tuesday, as signs of slowing coronavirus
spread and expectations of more central bank and government
stimulus to combat virus outbreak underpinned sentiment.
The rate of new infections slowed in Italy, Spain and the centre
of the US outbreak - New York.
Japanese Prime Minister Shinzo Abe pledged to roll out an
unprecedented economic stimulus as he prepares to declare a state
of emergency for the capital Tokyo and six other prefectures, for a
period of about one month.
Singapore announced an additional S$5.1 billion (US$3.6 billion)
stimulus to save jobs and protect the livelihoods of people amid
the spread of coronavirus.
The aussie received an additional support from the Reserve Bank
of Australia's monetary policy decision to leave its official cash
rate at a record low of 0.25 percent.
The RBA board also kept its targeted yield on 3-year government
bonds at around 0.25 percent.
In economic releases, data from the Australian Bureau of
Statistics showed that Australia posted a seasonally adjusted
merchandise trade surplus of A$4.361 billion in February.
That beat expectations for a surplus of A$3.750 billion and was
down from the downwardly adjusted A$4.745 billion surplus in
January (originally A$5.210 billion).
The latest survey from the Australian Industry Group showed that
the service sector in Australia continued to contract in March, and
at a much faster rate, with a Performance of Service Index score of
38.7.
That's down from 47.0 in February and it moves further beneath
the boom-or-bust line of 50 that separates expansion from
contraction.
The aussie spiked up to a 1-week high of 0.6194 versus the
greenback and near a 2-week high of 67.46 versus the yen, from its
early lows of 0.6075 and 66.37, respectively. The next possible
resistance for the aussie lies around 0.68 versus the greenback and
75.00 versus the yen.
The aussie firmed to 1.7550 against the euro, its highest level
since March 12. On the upside, 1.70 is likely seen as the next
resistance level for the aussie.
Reversing from its early lows of 0.8575 against the loonie and
1.0247 against the kiwi, the aussie moved up to 6-day peaks of
0.8682 and 1.0319, respectively. The aussie is poised to find
resistance around 0.90 against the loonie and 1.06 against the
kiwi.
The kiwi climbed to near a 4-week high of 1.8060 against the
euro, 1-week highs of 0.6016 versus the greenback and 65.46 versus
the yen, off its early lows of 1.8217, 0.5919 and 64.66,
respectively. The kiwi is seen locating resistance around 1.70
against the euro, 0.64 versus the greenback and 70.00 versus the
yen.
The loonie appreciated to a 1-week high of 1.4012 versus the
greenback, near 5-week high of 1.5203 against the euro and near a
2-week high of 77.71 versus the yen, after dropping to 1.4143,
1.5258 and 77.08, respectively in early deals. If the loonie
rallies further, it is likely to test resistance around 1.30 versus
the greenback, 1.45 against the euro and 0.80 versus the yen.
Looking ahead, Canada Ivey PMI for March and U.S. consumer
credit for February will be featured in the New York session.
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