Australian Dollar (AUD) Clouded by Surge in Covid-19 Cases
The Australian Dollar (AUD) was able to make gains against the US Dollar (USD) but struggled to make significant gains against other currencies yesterday.
The ‘Aussie’ was clouded by the surge in coronavirus cases and growing geopolitical tensions as China revealed it had taken over the premises of the US consulate in Chengdu. However, Reserve Bank of Australia (RBA) Assistant Governor, Chris Kent gave the Australian Dollar support when he said negative interest rates are not an option.
Looking ahead, it is likely growing tensions between the US and China will drive movement in the Australian Dollar due to a lack of economic data releases.
Pound (GBP) Struggles as UK Imposes Travel Quarantine on Spain
The Pound (GBP) was boosted by a weakness in the US Dollar (USD), but mixed against other rivals as uncertainty over Brexit and the country’s economic prospects left many traders wary.
Last week saw London and Brussels clash over a free trade agreement, with Britain remaining optimistic a deal will be reached and the EU deeming it unlikely. Added to this, Britain’s government imposed a two-week quarantine on all travellers returning from Spain.
Traders will continue to focus on Brexit as Britain and the European Union continue negotiations this week, any pessimistic reports will prevent GBP from making gains this week.
Euro (EUR) Boosted as German Economy Recovering ‘Step by Step’
The Euro (EUR) rallied against a handful of currencies on Monday as the currency continued soaring, supported by the €750 billion fiscal stimulus plan agreed last week.
Data released during the session also offered support as German business morale continued on its path to recovery. The Ifo institute showed the business climate indicator jumped in July, and its President Clemens Fuest said, ‘the German economy is recovering step by step’.
Single currency traders will monitor today’s latest unemployment data from Spain. EUR could edge lower if Spain’s unemployment rate jumps more than expected in the second quarter.
US Dollar (USD) Tumbles to Lowest Level Since September 2018
The US Dollar (USD) slumped during Monday’s session, and is on course to its lowest level since September 2018 as US-China tensions and concerns about the economy saw the currency lose its safe-haven appeal.
Coronavirus infections in the country do not appear to show signs of slowing and US-China relations deteriorate further as US diplomatic staff left the consulate in Chengdu after Beijing’s 72-hour deadline.
The US Dollar is likely to remain under pressure during today’s session if traders continue to move away from the currency as they focus on deteriorating US-China relations and growing coronavirus cases.
Canadian Dollar (CAD) Slides on Growing Geopolitical Tensions
The Canadian Dollar (CAD) slumped at the start of the week as oil prices edged lower, suffering on geopolitical tensions and global coronavirus cases.
Looking ahead, if oil prices slide during today’s session it is likely to send the oil-sensitive ‘Loonie’ lower.
New Zealand Dollar (NZD) Gains despite Deteriorating US-China Relations
The New Zealand Dollar (NZD) was able to make gains against a handful of its main rivals including the US Dollar and Canadian Dollar.
While geopolitical tensions and coronavirus cases increased, the ‘Kiwi’ was able to make gains as US Senate Republicans were expected to unveil a $1 trillion coronavirus aid package to support the world’s largest economy.
If reports show the US economy is likely to benefit from further fiscal stimulus, the risk-sensitive NZD will edge higher.