Australian Dollar (AUD) Suffers as Melbourne Lockdown to Cost A$5 Billion
The Australian Dollar (AUD) remained under pressure on Wednesday as traders continued to focus on the new lockdown in Melbourne.
Risk appetite suffered a blow after the country’s second-largest city reinstated measures. Added to this, it is suggested the six-week long lockdown could cost around A$5 billion of economic output and force the government to expand stimulus further.
This morning could see the ‘Aussie’ receive a slight upswing of support following upbeat Australian home loans data, although pessimism about the Melbourne lockdown will likely limit gains.
Pound (GBP) Clings to Earlier Gains despite Sunak’s Mini Budget
The Pound (GBP) remained largely flat and held onto the previous day’s gains after Chancellor Rishi Sunak’s budget plan.
The finance minister warned of hardship ahead and said Britain faces ‘profound economic challenges’. He launched a number of schemes aimed at preventing the economy from facing a huge employment crisis, which included a ‘new jobs retention bonus’ and ‘kickstart scheme’.
Looking ahead, attention is likely to turn back to Brexit as the clock is ticking away for the country to secure a post-Brexit trade deal with the European Union.
Euro (EUR) Struggles as France Set for Worst Recession Since Records Began
The Euro (EUR) remained rangebound today despite upbeat economic forecasts from France.
INSEE statistics agency said the French economy is likely to rebound in the second half of this year after a steep slump. The most recent forecast suggests the bloc’s second-largest economy will shrink by -17% in Q2 but will rebound by 19% during Q3, although this would still make this the country’s worst recession since records began in 1948.
The single currency could edge higher today if upbeat trade balance data from Germany shows the export-reliant sector is recovering.
US Dollar (USD) at the Mercy of Risk Appetite
The US Dollar (USD) edged slightly lower against many of its rivals during yesterday’s session as investors weighed up hopes for a quick economic recovery with the growing threat of a second wave of the coronavirus pandemic.
The safe-haven US Dollar has remained at the mercy of risk appetite so far this week. While demand for the ‘Greenback’ remained largely steady, many believe the standstill for USD is largely due to a lack of visibility for global growth.
Looking ahead, risk appetite could suffer a further blow if US initial jobless claims reveal the number of Americans applying for unemployment remains at unprecedented levels due to the coronavirus pandemic.
Canadian Dollar (CAD) Flat as Oil Prices Broadly Stable
The Canadian Dollar (CAD) also remained flat during Wednesday’s session as oil prices were broadly stable. However, rising US crude stockpiles and growing coronavirus outbreaks in the United States continued to limit gains.
However, upbeat housing starts data from Canada during today’s session could offer the ‘Loonie’ a slight upswing of support later.
New Zealand Dollar (NZD) Struggles as Safe-Haven Demand Dominates
The New Zealand Dollar (NZD) edged lower during Wednesday’s session as worries about a second wave of the coronavirus pandemic continued to dominate markets.
Looking ahead, if safe-haven demand continues to edge higher today after dire US jobless data, it will prevent the ‘Kiwi’ from making any significant gains.
Upcoming Data
9 July 11:30 AUD Home Loans (May) 3%
9 July 16:00 EUR German Balance of Trade (May) €21.1B
9 July 22:15 CAD Housing Starts (June) 210K
9 July 22:30 USD Initial Jobless Claims (4 July) 1380K