- RBA Dr Philip Lowe reiterates expectations that coronavirus downturn will be less harsh than initially feared
- Australian service sector and manufacturing sector PMI’s up next
- Safe have US Dollar eases as reopening economy optimism overshadows second wave fears
- At 14:15 UTC, Australian Dollar US Dollar trades above US$0.69
The Australian Dollar is soaring versus its US counterpart at the start of the new week, as optimistic comments fuel its recovery. The Australian Dollar US Dollar exchange rate has pared last week’s losses, and more, by the start of the US session on Monday.
At 14:00 UTC, AUD/USD is trading +1.1% at US$0.6906 at the top end of the trading range.
The Australian Dollar has managed to soar, despite a mixed mood in the broader market. The World Health Organization reported the largest daily jump in coronavirus cases of 183,000 on Sunday. A grim milestone which has unnerved investors as fears over a second wave of infections intensify.
However, the Aussie has pushed higher following encouraging comments from the Reserve Bank of Australia’s Governor Dr Philip Lowe. Dr Lowe noted, once again, that the impact of coronavirus may not be a bad an initially anticipated.
Dr Lowe added that the Aussie’s strength is not considered to be a problem right now and cited better health and economic outcomes from the coronavirus crisis, compared to countries, and strong commodity prices as reasons for his upbeat assessment.
Australia has one of the world’s better coronavirus records, pulling the spread under control quickly, with just 102 deaths.
Looking ahead Australian Dollar investors will move their attention to Commonwealth Bank service sector and manufacturing sector PMI readings. Analysts are expecting a strong rebound in manufacturing with the sector almost moving into expansion. However, the service sector is expected to remain deep in contraction.
The safe haven US Dollar is falling as investors are caught between conflicting drivers. On the one hand, fears of a second wave of infections are weighing on sentiment, particularly as numbers in some US states rise and Germany sees a flare up in cases. Beijing’s recent increase in cases is fading.
However, reopening optimism continues to support risk sentiment, pulling the US Dollar lower and boosting demand for riskier assets such as stocks. The US stock market has opened higher.
