- Rising new covid-19 cases raise fears of lockdown measures being re-imposed
- 40,000 new daily cases in US, Texas halts reopening plans
- US consumer confidence & personal spending miss forecasts, adding to downbeat tone
- Australian Dollar US Dollar exchange rate (AUD/USD) set to gain 0.15% across the week
The Australian Dollar is falling lower versus the US Dollar, paring gains from the previous session.
At 14:15 UTC, AUD/USD is trading -0.4% at US$0.6850. The is at the lower end of the daily traded range as a resurgence in new coronavirus cases in the US threatens to halt progress in the reopening of the US economy.
Risk aversion is dominating the US session, with riskier assets, such as equities, and riskier currencies, such as the Aussie Dollar, slipping lower.
The US recorded an all-time daily high of 40,000 covid-19 cases on Thursday, with a recent surge in California, Florida and Texas leading the way. Texas has halted its aggressive reopening plan in order to bring infections and hospitalisations back under control. Investors fear that this could happen in other states knocking the fragile economic recovery off course.
Rising cases aren’t just occurring in the US, parts of Europe, and Australia are also experiencing climbing infections, unnerving investors. The markets have remained relatively buoyant despite lingering concerns and this is because the overriding assumption is that the Fed will ramp up assistance if the economy starts to crack.
There was no Australian data released today, leaving the currency to be driven by sentiment.
US domestic data added to the downbeat tone. US personal spending underwhelmed, rebounding by 8.2%, less than the 9% jump forecast. This was still a sharp increase on April’s record -12.6% drop.
US consumer confidence also came in short of expectations at 78.1 in June, missing forecasts of 79. Whilst this is only a slight difference it is an extremely important one. Confident consumers spend more money, which is essential for the US economy to recover quickly. A nervous consumer is unlikely to spend so freely and will hold back the economic rebound leading to a more drawn-out recovery.