AUDNZD stirs as fiscal cliff avoided

For those with an interest in the evolution of the Australian economy during this challenging period, it’s been a busy morning that included the delivery of the RBA minutes for the boards July meeting, RBA Governor Philip Lowes speech for the Anika Foundation Luncheon and an announcement from the government on an extension of its unemployment benefits.

Charts (5)

From a market perspective, the government’s decision to extend the JobKeeper and JobSeeker coronavirus government supplements is the most meaningful of today’s events.

The Jobkeeper program originally scheduled to end on the 27th of September 2020 will now be extended to 28th of March 2021 with payments cut from $1500 a fortnight for full-time workers to $1200 as of the 28th of September. The payment will step down again at the start of January to $1000 a fortnight, until the end of March.

The JobSeeker payment originally scheduled to end on the 24th of September 2020 will be extended to the 31st December but at a reduced rate of $250 per fortnight (down from $550) with reinstated means-testing.

The decision to extend both programs will cost the government an extra $20bn. However, the program will help the economy weather the impact of the Victorian lockdown, a possible second wave in other states and support sectors of the economy where the impact of the coronavirus lingers including hospitality and international tourism.

Importantly the extensions of both programs will reduce the prospect of the Australian economy falling off the “fiscal cliff” at the end of September and helped AUDNZD rally post the announcement.  

Technically a case can be made that AUDNZD completed a three-wave corrective pullback at last week’s 1.0566 low and that the uptrend is on the verge of resuming.

Should AUDNZD now break and then post daily close above the short term resistance 1.0690/00 traders might like to use it as initial confirmation the next leg higher has commenced and consider entering longs in AUDNZD with a stop loss placed below the 1.0566 swing low. The target is a retest and break of the 1.0881 June high.  

Keeping in mind that the outlook for this trade idea would be reduced should the number of coronavirus cases accelerate sharply in the state of NSW in the days/weeks ahead.

AUDNZD stirs as fiscal cliff avoided

Source Tradingview. The figures stated areas of the 21st of July 2020. Past performance is not a reliable indicator of future performance.  This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation


This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

GAIN Capital Singapore Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the GAIN Capital group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), GAIN Capital Singapore Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact GAIN Capital Singapore Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither GAIN Capital Singapore Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

GAIN Capital Singapore Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit for the complete Risk Disclosure Statement.

Important Notice:

Cryptocurrencies are not legal tender currency and trading of derivatives on Cryptocurrencies are currently not covered under any regulatory regime in Singapore. Consequently, investors should be aware they do not have protection under the Securities and Futures Act (Cap. 289). Please ensure that you are fully aware of the risks.