Chart of the day: AUDUSD support found at post-GFC lows
The Australian dollar is trading at post-GFC lows and has carved out support at 0.6462.
Risk aversion eased yesterday as markets looked to governments for fiscal relief after Monday’s sell-off - the worst since the GFC. US President Donald Trump floated the idea of waiving payroll taxes and providing aid to troubled airlines and cruise operators. AUDUSD rejected the 0.6462 support level on yesterday’s open as risk aversion eased and moved higher.
AUDUSD has been a global risk proxy during the coronavirus outbreak due to Australia's close trading relationship with China. Virus fears have pushed the AUD to low levels not seen since the GFC.
If central banks cut as expected and global governments deliver soon on stimulus plans, AUDUSD should find more relief amid market turmoil - and central banks won’t want to worsen the situation by not meeting markets. Of course, virus fears still have a hold on markets as all of Italy and one New York county go into lockdown. A close below 0.6462 and there’ll be no obvious support until the GFC lows.
The Australian dollar hit lows of almost 0.6000 USD during the GFC, and traded as high as 1.1000 in 2011.
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