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Weekly Roundup: Australian dollar struggles against coronavirus second wave fears

currency-newsWeekly Roundup: Australian dollar struggles against coronavirus second wave fears
The Australian dollar suffered a blow this week after risk appetite was briefly dented by fears of a second wave of the coronavirus.

Last week the Australian dollar fluctuated as optimism for a global recovery from the coronavirus pandemic as well as the prospects of capped long-term yields in the US boosted sentiment.

Risk sentiment rallied ahead of last week’s Federal Reserve meeting, although the bank’s downbeat economic projections squashed the rally in riskier assets and sent AUD lower.

Risk appetite then declined further at the start of this week as traders worried about a second wave of the coronavirus pandemic after Beijing reported dozens of new cases.

The Australian dollar was also pressured as the Reserve Bank of Australia’s (RBA) minutes showed that while the bank expects the current downturn to be shallower than expected, it still expects there to be ‘long-lasting effects’ on the economy.

Coming up this week, Australia’s labour market statistics are going to be the main focus for investors. AUD could lose ground on Thursday if data shows another increase in the country’s unemployment rate, but any improvement in joblessness would be AUD supportive.  

A recovery in demand for higher risk assets would also benefit the ‘Aussie’ – but demand for safe-havens may remain elevated if there are further reports of new coronavirus infections in China.
Philip McHugh

Philip McHugh

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)

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