AUD analysis 19.03.2020

The Australian dollar fell during the Asian session to witness its lowest level since October 21, 2002 against the US dollar amid growing fears of a global outbreak of the Coronavirus virus and in the wake of developments and economic data that it followed about the Australian economy, which included the Bank of Australia's disclosure of its quarterly bulletin before the talk Expected Australian central bank governor Philip Lowe in Sydney is on the cusp of developments and economic data expected Thursday by the US economy.

At exactly 02:42 am GMT, the Australian dollar pair fell against the US dollar by 3.45% to 0.5574 levels compared to the opening levels at 0.5773, after the pair achieved its lowest level in nearly two decades at 0.5510, while achieving the highest during the trading session At 0.5816.

We have followed the Australian economy on the disclosure of labor market data with the release of the unemployment rates, which showed a decline to 5.1% compared to the previous reading for January and expectations at 5.3%, with the reading of change in employment showing an increase of 26.7 thousand compared to a rise of 12.9 thousand in January, contrary to expectations for a rise of 8.5 thousand, and in conjunction with the Reserve Bank of Australia revealed its quarterly bulletin.

Other than that, the markets are currently looking for what will come out of the speech of the Australian Central Bank Governor, Philip Lowe in Sydney. In another context, we followed yesterday the decision of Australian Prime Minister Scott Morrison to impose a national emergency in Australia amid growing concern over the spread of the Corona virus, as Morrison asked citizens Australians avoid traveling abroad in light of the deadly virus outbreak, which may last for at least six months.

It is reported that Chinese President Xi Jinping said yesterday, Wednesday, that a global outbreak of the Corona virus threatens the Chinese economy, Asia's largest, the largest trading partner of Australia, and the second largest economy in the world after the United States, explaining that his country must adjust policies according to necessity, and that Wuhan Province must begin work Gradually, he will resume production, adding that the risks to his country's economy have increased.

On the other hand, investors are currently looking to the US economy for the disclosure of industrial sector data with the release of the Philadelphia Industrial Index reading, which may reflect a shrinkage in the expansion of what amounted to 9.5 compared to 36.7 last February, and this comes in conjunction with the release of the aid claims index for the past week On March 14th, which may reflect an increase of 9 thousand requests to 220 thousand requests compared to 211 thousand requests in the previous weekly reading.

This also comes in conjunction with the issuance of the reading of the ongoing subsidy requests for the last week on the seventh of this month, which may reflect an increase of 13 thousand requests to 1,735 thousand applications compared to 1,722 thousand requests, up to the issuance of the reading of the current account, which may reflect the shrinking of the deficit to the value of 109 $ 1 billion versus $ 124 billion in the past third quarter, and with the reading of leading indicators showing growth slowed to 0.1% from 0.8% in January.

This comes hours after the Federal Reserve announced that it will enter the commercial paper markets, which have been frozen in the midst of the economic turmoil, threatening businesses that need financing between today and the other, and the Federal Open Market Committee stated on Tuesday that it will establish a financing facilitation committee for commercial papers to support the cash flow of homes and businesses and that it has formed A special purpose vehicle for purchasing any securities of unsecured assets with $ 10 billion in support from the Treasury.

This came hours after the Federal Reserve’s surprising meeting last Sunday, which is the second surprising meeting in less than two weeks, after the previous sudden meeting on the third of this month in which the Federal Reserve’s monetary policy makers decided to return to the short-term benchmark interest rates. Zero levels reached in the wake of the worsening global financial crisis more than a decade ago.

The members of the Federal Open Market Committee reduced the interest on federal funds by 100 basis points to between zero levels and 0.25%, which they remained from 2008 until the meeting of 27-28 October 2015, after reducing them in the previous emergency meeting by 50 points. The basis is between 1.00% and 1.25%, and this comes in the wake of the committee members cutting interest three times by 25 basis points in previous meetings last year.

The Federal Reserve monetary policy statement stated that the decision to reduce will be effective from Monday March 16, and that the Federal Open Market Committee will carry out repurchases of treasury bonds at a minimum of $ 500 billion per month and mortgage-backed securities at $ 200 billion per month At least, these purchases should be made at the appropriate speed to support the smooth performance of the stock market, treasury and mortgage agency.

Technical analysis

The Australian dollar versus the US dollar pair traded today with a strong decline, exceeding our awaited target at 0.5820 and approaching the 0.5500 barrier, to support the continuation of the downside trend in the medium and long term, noting that the next negative station reaches 0.5228.

Thus, we expect the bearish bias to continue during the upcoming sessions, noting that a break of 0.5785 will stop the negative pressure and lead the price to start an upside correction in the intraday and short term.

The expected trading range for today is between 0.5450 support and 0.5650 resistance.

Expected trend for today: bearish.