Australian Dollar Tumbles as Hopes for a Global Rebound Fade

Australian Dollar (AUD) Slides as Caution Returns to Markets

The Australian Dollar (AUD) suffered losses against a handful of currencies on Wednesday as caution returned to markets.

Earlier in the session, risk appetite was buoyed after a top White House advisor said China has stepped up its ‘game’ on trade. However, attention turned back fears of a second wave of the coronavirus pandemic.

Looking ahead, if traders continue to fret over the threat of a second wave of the virus, the risk-sensitive ‘Aussie’ will slump further.

Pound (GBP) Flat as US Considers Slapping Tariffs on British Exports

The Pound (GBP) was left largely flat on Wednesday as global sentiment turned cautious and Bloomberg News reported the US was considering slapping $3.1 billion tariffs on exports from Britain, Spain, France, and Germany.

Meanwhile, Prime Minister Boris Johnson revealed significant easing of the lockdown. Although, top medics signed an open letter warning of the risks of a second wave of coronavirus, which weighed on GBP.

Looking ahead, Sterling could edge higher today following the release of data from the Confederation of British Industry (CBI) which could show the pace of decline in trade has eased.

Euro (EUR) Struggles despite Rebound in German Business Confidence

The Euro (EUR) struggled against a handful of currencies as risk appetite declined and traders flocked back towards safe-haven currencies including the US Dollar.

Markets remained cautious about the possibility of a second wave of the coronavirus despite better than expected economic data, with German business confidence seeing the strongest rebound on record, which offered EUR some support.

Looking ahead, the single currency could claw back some losses today if GfK’s German consumer confidence also rebounds in July as lockdown restrictions continue to be eased.

US Dollar (USD) Regains Losses After Two Days of Declines

The US Dollar (USD) was able to regain previous losses on Wednesday after two straight days of decline as hopes for a global economic rebound faded once again.

Growing coronavirus outbreaks in the United States dampened sentiment as well as a downbeat forecast from the IMF. The International Monetary Fund said the virus was causing wider and deeper damage than first thought, boosting the safe-haven USD.

‘Greenback’ traders will focus on today’s US GDP which could boost the currency if final data shows the US economy is on track for a deep recession.

Canadian Dollar (CAD) Slides as Oil Price Gains Reversed

The Canadian Dollar (CAD) made gains against riskier assets but struggled against typical safe-haven currencies as traders flocked to safety.

The oil-sensitive ‘Loonie’ was left under pressure after oil prices fell, reversing the surge seen just a day before. Worries about a second wave of the virus dampened prices. Looking ahead, if oil prices continue to tumble this week, it will send CAD lower.

New Zealand Dollar (NZD) Tumbles on RBNZ Meeting

The New Zealand Dollar (NZD) suffered losses after the Reserve Bank of New Zealand (RBNZ) said the balance of risk remains to the downside and added they would be prepared to use additional stimulus if required.

Looking ahead, if risk appetite continues to slump the ‘Kiwi’ will extend its losses and the country’s trade balance disappoints.

Upcoming Data

25th June 09:45                  NZD                       Balance of Trade (May)                                                 N$1000M

25th June 17:00                  EUR                        German GfK Consumer Confidence (July)              -13

25th June 21:00                  GBP                       CBI Distributive Trades (June)                                     -36

25th June 23:30                  USD                       GDP Growth Rate (Q1)                                                   -5%

25th June 23:30                  USD                       Durable Goods Orders (May)                                      8.5%

Louisa Heath

louisa.heath@torfx.com


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