- Australian Dollar rebounded from 10 day low overnight as risk sentiment edges higher
- Fears of a second wave of coronavirus infections in US unnerved investors in early trade
- US Dollar (USD) eases as consumer sentiment beats expectations in June 78.9 vs 75 expected.
- At 14:00 UTC, AUS/USD trades +0.5% at US$0.6886
The Australian Dollar is clawing back some losses today after sliding 2% versus its US counterpart in the previous session. The Australian Dollar US Dollar exchange rate settled on Thursday at US$0.6855.
At 14:00 UTC, AUD/USD is trading +0.5% at US$0.6886 after rebounding from a 10-day low of US$0.6800 struck in the Asian session. Despite today’s move higher, the Australian Dollar is set for a losses across the week of 1.2%, its first loss in three weeks.
The Australian Dollar fell hard in early trade as risk sentiment dropped on fears of a second wave of coronavirus infections. The number of coronavirus cases in 24 US states have started to rise, raising fears that the numbers are going up as lockdown measures are eased. A second lock down in the US could potentially put a halt to the global economic recovery.
The mood in the markets has since improved as investors turn their attention back towards the reopening of global economies and easing of lock down measures.
There is no Australian economic data due to be released until next week, meaning that sentiment will drive the Australian Dollar. On Tuesday investors will await the minutes from the Reserve Bank of Australia (RBA) monetary policy meeting.
The US Dollar started today’s session on the front foot, however demand for the safe haven has eased as risk appetite slowly increases.
US consumer confidence data has helped buoy risk sentiment. According to the University of Michigan, consumer confidence edged higher in June as households responded to the reopening of businesses as lockdown measures eased. The preliminary consumer confidence reading showed morale ticked higher to 78.9, up from May’s 72.3 and significantly up from analysts’ expectations of 75.
Consumer sentiment is important because confident consumers are happy spending. Spending is what the US consumer driven economy needs to reignite growth and recover from the covid-19 impact.
