- Market sentiment falters amid fears of a second wave of infections
- Pace of easing global lockdown measures may need to slow
- Australian business confidence data up next
- AUD/USD trades -0.9% at US$0.6470 at 14:00 UTC. Real time exchange rate
After rising in the Asian session overnight, to a high of US$0.6562, the Australian Dollar has been unable to hold onto those gains.
At 14:00 UTC, AUD/USD is trading -0.9% at US$0.6470. This is at the lower end of the daily traded range of US$0.6464 – US$0.6562 as the market mood sours.
Today’s move southwards comes after the Australian Dollar US Dollar exchange rate surged 1.7% across the previous week, in its fifth straight week of gains.
Concerns over a second wave of infections are weighing on sentiment at the start of the new week, overshadowing optimism surrounding the reopening of economies and hitting demand for perceived riskier Australian Dollar.
Germany announced that its reproduction rate, the R pushed back above 1, amid fears that the country eased lockdown measures too quickly. In South Korea authorities are battling an outbreak involving a nightclub in Seoul. China also has another city under lockdown whilst Wuhan reported its first covid-19 cluster since restrictions were lifted.
The most recent coronavirus statistics suggest that the markets have been overly optimistic. With fears of a second wave of infections running high, the easing of lockdown measures might need to happen at a much more gradual pace. This would mean economies are reopened more slowly. Risk appetite has taken a hit as a result.
Looking ahead investors will focus on The National Bank of Australia’s business confidence and business conditions index for April. These indices slumped to an all-time low of -66 and -21 respectively in March. data which is due for release in the Asian session. Chinese inflation data will also be closely eyed. Weak readings could drag on demand for the Australian Dollar.
Whilst the riskier Aussie Dollar was out of favour, investors were buying into the safe haven US Dollar owing to risk off flows.
The darkening market mood comes after the US Dollar brushed off Friday’s jobs report which showed that 20.5 million jobs were lost in US in April and the unemployment level spiked up to 14.7%.
There is no high impacting Us data due to be released today, leaving the markets vulnerable to sentiment moves. Looking ahead to tomorrow, investors will be watching US inflation and Federal Reserve Jerome Powell’s testimony closely.
