Australian Dollar Tumbles as Coronavirus Sinks US into Deep Recession

Australian Dollar (AUD) Slides as Risk Appetite Plummets

The Australian Dollar (AUD) slumped across the board on Thursday after data revealed Australia’s building permits unexpectedly slumped by -4.9% in June after analysts expected an increase.

Added to this, markets were cautious after the US Federal Reserve Chief said the coronavirus crisis was slowing the recovery in the world’s largest economy. Also, coronavirus cases continued rising in Victoria.

Looking ahead, the ‘Aussie’ could continue to suffer losses following the release of the latest Producer Price Index (PPI). If inflation slumps further than expected it will weigh on the currency.

Pound (GBP) Rises as Third of Furloughed Workers Return

The Pound (GBP) made gains during yesterday’s session after data revealed that a third of furloughed British workers returned to work in early July.

Businesses surveyed said that 7% of their staff had returned from furlough while 17% remained on leave. However, gains were slightly limited after a separate data release showed the number of cars built in the UK tumbled to its lowest level since 1954.

Looking ahead, Sterling will likely move on souring market sentiment. Sterling could be limited following the release of the latest Nationwide housing prices which are expected to drop in July.

Euro (EUR) Slides as Coronavirus Wipes Out 10 Years of German Growth

The Euro (EUR) gained against a handful of currencies, although slumped against the Pound after data showed the German economy shrank at a record pace in the second quarter.

The bloc’s largest economy contracted at its fastest pace on record, which annihilated nearly 10 years of growth. Further data showed the bloc’s unemployment rate jumped to 7.8%, however, economic sentiment rebounded and offered some support as global sentiment soured.

The single currency could slide during today’s session as traders eagerly await the latest Q2 growth data from France, Spain, Italy, and the Eurozone as a whole.

US Dollar (USD) Gains as Economy Contracts at Fastest Pace Since Great Depression

The US Dollar (USD) made gains against a handful of currencies but remained flat against the Euro and slumped against Sterling.

The latest data from the USA showed the economy contracted at its fastest pace since the Great Depression, with GDP collapsing at an annual rate of -32.9% during Q2. Added to this, the latest initial jobless claims showed Americans filing for unemployment increased for a second week in a row.

Looking ahead, the Dollar could make further gains against riskier assets if June’s personal spending and personal income data disappoints investors and weighs on risk appetite.

Canadian Dollar (CAD) Tumbles as Covid-19 Threatens Oil Recovery

The Canadian Dollar (CAD) slumped during yesterday’s session as oil prices fell while coronavirus infections around the globe surged and threatened the recovery in fuel demand just as oil producers are set to increase output.

This has created a headache for OPEC, which hoped demand would recover quickly, instead the group will need to either tolerate lower prices for longer or consider further cuts.

The ‘Loonie’ could rebound during today’s session as traders expect May’s GDP to rebound after a double-digit drop the month before.

New Zealand Dollar (NZD) Slides on Weak US Data

The New Zealand Dollar (NZD) slumped against a handful of its rivals on Thursday as risk appetite slumped. Weak data from the US showing the country had suffered its worst contraction since the Great Depression weighed on sentiment and sent the ‘Kiwi’ lower.

Today could see NZD continue to struggle to make gains against its rivals as risk appetite continues to suffer.

Upcoming Data

11:30 AUD PPI (Q2) -1.8%

15:30 EUR French Flash GDP (Q2) -16.2%

16:00 EUR German Retail Sales (June) -3%

16:00 GBP Nationwide Housing Prices (July) -0.8%

16:45 EUR France Inflation Rate (July) 0.2%

17:00 EUR Spain Flash GDP (Q2) -14.6%

18:00 EUR Italy Flash GDP (Q2) -18%

19:00 EUR Flash GDP (Q2) -14.7%

22:30 CAD GDP (May) 3%

22:30 USD Personal Spending (June) 5.3%

22:30 USD Personal Income (June) -0.3%

Louisa Heath

louisa.heath@torfx.com


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