- Beijing lockdown 27 neighbourhoods amid 2nd wave fears, riskier Australian Dollar (AUD) declines
- Australian unemployment increases to 7.1%
- Safe have US Dollar (USD) rises after worse than forecast jobless claims
- Australian Dollar US Dollar exchange rate (AUD/USD) heading for weekly loss
The Australian Dollar is trading lower versus its US counterpart, extending losses for a third straight session.
At 14:15 UTC, AUD/USD is trading -0.5% at US$0.6850. This is at the lower end of the tight daily trading range of just 60 points. The pair is heading towards the final day of the trading week down -0.1%.
The Australian Dollar is heading southwards amid concerns over the global economic recovery and fears of a second wave of coronavirus in China. Risk aversion dominates supporting the safe haven US Dollar whilst dragging on the Australian Dollar.
Beijing has re-imposed lockdown restrictions on at least 27 neighbourhoods that have been classified as medium risk or high risk areas, as fears grow that a second wave of covid-19 is flaring up in the Chinese city. Just as China is starting to reignite its economy following a strict lockdown earlier in the year, this spike in cases is threatening to de-rail the recovery.
Domestic data is also weighing on demand for the Australian Dollar. Unemployment in Australia increased by a more than expected 7.1%, with 227,000 jobs lost in May.
Data revealed that applications for unemployment benefits in the US fell by less than analysts had forecast, showing only a very gradual improvement in the US labour market following the coronavirus lockdown.
Initial jobless claims increased by 1.51 million, just marginally below last week’s 1.57 million and 200,000 over the 1.3 million expected. Continuing claims decreased slightly to 20.5 million compared to expectations of 19.8 million.
The figures show that even with states gradually reopening, hiring is not taking off in any big way. This means that the labour market recovery could be longer and slower than initially expected.
These figures are broadly in line with Federal Reserve Jerome Powell’s more cautious outlook, dampening expectations of a quick economic rebound. The safe haven US Dollar gained ground following the release.
