The pound struggled to find any support on Friday, amidst speculation over the restrictions the UK government is likely to impose as the UK faces its second wave of coronavirus.
The Australian dollar gained at the start of the week as market sentiment picked up on relief that the US-China trade deal was still intact after a White House trade advisor briefly caused confusion by suggesting otherwise.
This soon changed as the risk-sensitive currency fluctuated on souring market sentiment, with fears of a second wave of coronavirus cases and threat of a transatlantic trade war weighing on the Australian dollar.
Some optimism returned today after investors reacted positively to the latest Chinese manufacturing PMI data rising to growth of 50.9. As a result, the risk-averse ‘Aussie’ benefited as Australia’s largest trading partner’s economy steadied this month.
However, the number of coronavirus cases continue to increase in Australia, with Victoria – the nation’s second most populated city – showing a worrying new outbreak of the virus.
Consequently, ‘Aussie’ traders are remaining cautious as investors continue to eye whether Australia could be seeing the signs of a possible second wave of Covid-19. If so, this would considerably set back the economy.
Meanwhile, Australian dollar investors will be looking ahead to this evening’s release of the Australian AiG Performance of Manufacturing Index for June. Any improvement in Australia’s manufacturing sector would prove AUD-positive.
Looking to Wednesday, Australia’s building permits figures for May are expected to plummet from -1.8% to -10%, which could dampen sentiment.
Risk sentiment will also likely continue to drive the ‘Aussie’ this week, so any further signs of an improving Chinese economy would prove AUD-positive.
Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure
Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)