AUD Bolstered By Covid, Fiscal Matters

Coronavirus matters have stolen the limelight as AUD/NZD has advanced at the start to the week. A continued decline in Victoria's daily coronavirus case count, which fell to the lowest level in more than three months, inspired optimism about the effectiveness of the state's containment strategy. Across the Tasman, New Zealand's PM Ardern announced that Auckland's coronavirus alert level will be lowered to 2 from 2.5 on Wednesday, while the rest of the country will be moved to level 1. The decision on alert levels was signalled before and only confirmed today.

• A growing expectation of looming bold fiscal steps likely lent some further support to AUD. PM Morrison suggested that next month's budget will include supportive measures, but refused to reveal any details. Local press shed some more light on the matter, with the Sydney Morning Herald reporting that ministers plan to unleash an "astounding" amount of spending and push deficit "well beyond A$200bn". Separately, the AFR reported that "states are set to receive billions extra in infrastructure funding on the proviso they use it or lose it".
• PM Morrison was also optimistic the prospects for domestic labour market, promising the addition of "hundreds of thousands of more jobs coming back in between now and Christmas".
• Back on the other side of the Tasman, recovery in New Zealand's card spending lost steam and declined 5.8% M/M last month.
• The rate last changes hands +18 pips at NZ$1.0803. Bulls would be pleased by a rebound above the 50-DMA at NZ$1.0840, towards Sep 10 high of NZ$1.0936. Conversely, a dip through the 100-DMA at NZ$1.0767 would strengthen the bearish case, exposing Aug 3 low of NZ$1.0718.