AUD Steady as Massive Stimulus Rolls Out
Rowan Crosby • 2 min read
Government’s around the world are rolling out financial relief packages and that is adding to some hope in financial markets.
In Australia, the Morrison Government has unveiled a raft of measures aimed at supporting those who have lost their jobs as well as businesses that have been impacted by the widespread crackdowns.
Australian’s will be able to access wage subsidies up to $1500 a fortnight through their employers, while job seekers can receive special assistance due to the economic downturn.
The measures have seen $214 billion now allocated towards stimulus and support measures in three separate packages. This is equal to around 11 per cent of GDP to put that in perspective.
The Government will also help prop up landlords so renters alike if they are impacted by the financial fallout.
The massive moves have seen local stocks surge 7% with more upside expected to come in today’s session following another strong day on Wall Street. The real concern is now what that will look like for the next decade. As it will take years to get the balance sheet back on track. And this is reflective of not just Australia, but the entire world that is grappling with the coronavirus.
The AUD/USD has rightly been on the up of recent sessions. As we can see on the chart below, price has been making a series of higher lows all the way along this trend line and until that breaks we should be expecting a further push.
As I said yesterday, we must also attribute some of that push to the falling Greenback – but at the same time, the huge falls to around 0.5500 were probably overdone. But that is what happens in this sort of environment.
For the time being, the technicals are looking good for some short term trades.
Our plan is to simply buy pullbacks and risk off the most recent swing low. That means 0.6000 is our major level of interest. If price pulls back and holds – we can get long.
If price breaks, that will be a clear short signal in my eyes.