AUD range bound amid vaccine concerns

AUD - Australian Dollar

Price action across currencies markets was largely subdued through trade on Monday as investors looked to assess conditions following news several European countries will suspend the roll out of Astra Zeneca’s vaccine amid fears it could cause an increased risk of blood clotting. Germany France and Italy join the growing list of countries to pause their Astra Zeneca immunisation programs, dampening the recent uptick in risk demand. The AUD bounced between 0.7710 and 0.7770 offering little to excite investors. With equities and treasury yields correcting off Friday’s highs the AUD struggled to mount any momentum in either direction and looks to the RBA minutes later today for greater insight into the latest policy announcement. Given governor Lowe’s extensive commentary last week we don’t expect the minutes will reveal/provide any new insight and we anticipate the AUD will remain range bound between 0.7680 and 0.7820 with direction driven by variances in demand for risk.

Key Movers

The US dollar enjoyed a positive start to the week, advancing against a basket of major counterparts as equity markets and treasury yields corrected off Friday’s highs. Having touched a new all time high on Friday the S&P 500 offered only modest gains while 10-year yields fell marginally to 1.61%. Advancing 0.15% the dollar index benefited from a correction in the GBP and Euro with both currencies drifting lower following reports a host of European countries will suspend the use of the Astra Zeneca vaccine. The news is blow to Europe’s broader vaccination program with the common market already considered to be behind the US and UK in inoculating its citizenry, evidenced by the reports Italy has been forced introduced new lock down measures following a string of new cases. The Euro touched lows approaching 1.19 at 1.1910 while Sterling drifted below 1.3950.

With little of note on today’s macroeconomic docket attentions remain affixed to the broader recovery narrative. Any further derailment in the global vaccine narrative could prompt a correction in underlying risk demand.

Expected Ranges

AUD/USD: 0.7680 - 0.7820 ▲

AUD/EUR: 0.6450 - 0.6530 ▲

GBP/AUD: 1.7780 - 1.8120 ▼

AUD/NZD: 1.0710 - 1.0810 ▼

AUD/CAD: 0.9580 - 0.9690 ▼