AUD/USD struggles to hold above 0.60, erases more than 2%
- AUD/USD drops below 0.60 for the first time since 2003.
- The RBA says it's prepared to ease policy further to support the economy.
- US Dollar Index climbs to fresh multi-week highs above 99.
The AUD/USD pair extended its slide on Monday and dropped below the 0.6000 handle for the first time since April 2003. As of writing, the pair was trading at 0.5996, erasing 2% on a daily basis.
USD valuation drives FX markets
USD funding shortage seems to be the driving the US Dollar Index (DXY) higher on Tuesday to weigh on the pair. The three-month FX swap spreads on the EUR/USD surged to its highest level since 2011 at 124 bps at one point in the day to reflect the strong USD demand in currency derivative markets.
Ahead of the Retail Sales and Industrial Production data from the US, the DXY is at its highest level more than three weeks at 99.38, adding 1.4% on the day.
Meanwhile, the Reserve Bank of Australia's (RBA) March meeting minutes showed that the bank is ready to ease its policy further even after lowering its interest rate to a record low of 0.5%. The only data featured in the Australian economic docket on Wednesday will be the Westpac Leading Index.
Technical levels to watch for