Australian Dollar Struggles as Country Braces for Second Wave

Australian Dollar (AUD) Struggles as Australia Braces for Second Wave

The Australian Dollar (AUD) remained flat on Monday despite the increase in risk sentiment as traders hoped for further recovery packages in Europe and the United States.

However, the ‘Aussie’ struggled as Australia braces for a second wave of the coronavirus. Australia’s Acting Chief Medical Officer Paul Kelly said the surge in cases in Melbourne may take ‘weeks’ to calm despite the swift lockdown measures.

Tuesday could see AUD fall as traders focus on the release of the Reserve Bank of Australia’s (RBA) meeting minutes and a speech by the bank’s Governor, Philip Lowe.

Pound (GBP) Rallies on Coronavirus Vaccine Optimism

The Pound (GBP) rallied on Monday afternoon after reports revealed a coronavirus vaccine developed by the University of Oxford appeared to be safe. Trials showed it led to people making the antibodies and white blood cells that fight Covid-19.

The promising findings, as well as Prime Minister Boris Johnson’s comments that Britain will continue to engage constructively with the EU in trade talks, boosted Sterling.

Looking ahead, Pound traders will be focused on the ongoing fifth round of post-Brexit trade talks, with the Pound sensitive to any signs of progress.

Euro (EUR) Jumps to 19-Week High Against the US Dollar

The Euro (EUR) gave up its earlier gains yesterday afternoon after hitting a 19-week high against the US Dollar on Monday morning.

The single currency was buoyed by hopes the European Union would be able to agree on the coronavirus recovery fund to help the bloc’s hardest-hit economies. However, while leaders made progress, they remain divided over the composition of the fund as the ‘frugal four’ objected to the level of grants.

Looking ahead, the single currency could jump to fresh highs if European Union leaders are able to reach an agreement and cement unity in the Eurozone.

US Dollar (USD) Struggles as Traders Left Cautiously Optimistic

The US Dollar (USD) struggled on Monday as traders remained optimistic about further stimulus from the European Union and United States. Congress is currently in a battle over a fresh coronavirus aid bill, with both the Republicans and Democrats pushing for their own agenda.

However, the US Centers for Disease Control and Prevention warned that Covid-19 cases and deaths could jump once again in the autumn and winter months, which kept risk appetite in check.

Looking ahead, the safe-haven ‘Greenback’ could struggle today if markets remain upbeat about a coronavirus aid bill. Added to this, a better-than-expected Chicago Fed National Activity Index could boost risk appetite.

Canadian Dollar (CAD) Flat as Oil Prices Slide

The Canadian Dollar (CAD) remained largely flat on Monday, suffering losses against Sterling but making gains against the Euro. The ‘Loonie’ struggled to make significant gains as oil prices fell as coronavirus cases surged around the world.

However, investors remained cautiously optimistic about the ongoing EU talks over a coronavirus recovery fund. Meanwhile, CAD could edge higher later today following the release of May’s retail sales data which is expected to post a significant rebound.

New Zealand Dollar (NZD) Muted as Service Sector Rebounds

The New Zealand Dollar (NZD) was left largely flat during yesterday’s session as rising coronavirus cases offset optimism over further stimulus for both Europe and the US.

Meanwhile, Finance Minister Grant Robertson noted he would hold the remaining $14 billion in the coronavirus response fund for a second wave. The ‘Kiwi’ was also supported by data showing the services sector bounced back.

Looking ahead, NZD could struggle to make gains if traders continue to remain wary of growing coronavirus cases around the world.

 

Upcoming Data

21 July 11:30                       AUD                       RBA Meeting Minutes

21 July 12:30                       AUD                       RBA Governor Lowe Speech

21 July 22:30                       CAD                       Retail Sales (May)                                                            19.1%

21 July 22:30                       USD                       Chicago Fed National Activity Index (June)            3.2

Louisa Heath

louisa.heath@torfx.com


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