- Australian Dollar (AUD) recovers early losses as market mood improves
- Lock down in the state of Victoria will impact the economy in Q3
- US Dollar (USD) advances after initial claims fall to lowest level since the start of coronavirus crisis
- US non-farm payroll in focus
The Australian Dollar US Dollar (AUD/USD) exchange rate is extending gains for a third straight session on Thursday. At 14:30 AUD/USD trades +0.2% at US$0.7207, as it falls away from the high of the day. The pair is on track to gain 0.85% across this week so far, in its 7th straight week of gains.
The Australian Dollar quickly recovered earlier losses. Prime Minister Scott Morrison acted as a drag on the Australian Dollar in early trade after spelling out the Treasury’s estimates for the economic impact of the 4th stage lockdown in the state of Victoria.
The treasury estimated that a AUD$7 – AUD$9 billion hit to the economy in the third quarter is expected as a result of the resurgence of cases in Vistoria. Unemployment is also expected to reach 10% by the end of the year.
Looking ahead investors will focus on services sector data and comments from RBA policymaker Ellis.
The US Dollar is attempting to stage a comeback after US initial jobless claims slowed last week to 1.2 million, down from 1.4 million the previous week. This is the lowest number of Americans filling for unemployment benefits since the start of the coronavirus crisis and lower than the 1.41 million that analysts had forecast.
The data was some well needed good news surrounding the US labour market after ADP private payroll figures yesterday showed that the number of jobs created in the private sector slowed dramatically in July to just 168,000, compared to over 4 million in June.
Attention will remain firmly on the US labour market as the US non-farm payroll moves into focus. Analysts are expecting 1.2 million jobs to have been created in the US in July. However, the lead indicators this week, such as the ADP report and the employment component of the ISM non-manufacturing report have pointed towards a weaker reading. That said, these are unprecedented times so there is still a good possibility that the non farm payroll could surprise either way.