AUD/USD: Downside pressure should be limited – MUFG

The Reserve Bank of Australia (RBA) took steps, which alongside the introduction of temporary USD swap lines with other central banks, including the RBA, will certainly help alleviate upward pressure on USD, per MUFG Bank.

Key quotes

“The downside for AUD should be limited for two reasons. Firstly, the currency was already on the weak side of fair-value heading into this crisis and secondly, both the RBA and the government have responded with policy measures to limit the economic impact.” 

“The government announced two packages to support the economy, totalling AUD 84bn along with AUD 100bn in banking support measures. Ignoring the banking support, the fiscal support package amounts to 4.2% of GDP.”