Australian Dollar Falls on Surge in Coronavirus Cases

Australian Dollar (AUD) Slides as Victoria Records Second-Highest Day of Covid-19 Cases

The Australian Dollar (AUD) struggled at the end of the week after the latest Producer Price Index (PPI) showed inflation slumped by -1.2% in the second quarter due to the coronavirus crisis.

Added to this, Australia’s Victoria state recorded its second-highest day of new coronavirus cases on Friday. This comes despite the capital, Melbourne, being under a strict six-week stay-home order.

The ‘Aussie’ could make some gains today if both Ai Group’s Manufacturing Index and CommBank’s manufacturing PMI show higher-than-expected growth. An increase in ANZ’s job advertisements could also boost AUD.

Pound (GBP) Rises as House Prices Jump the Most in 11 Years

The Pound (GBP) was able to edge higher against a handful of currencies at the end of last week after UK house prices jumped by the most in 11 years, boosting hopes of economic recovery.

However, Sterling struggled after Prime Minister Boris Johnson delayed further easing of coronavirus lockdown restrictions by at least two weeks in order to keep the virus under control.

Looking ahead, Sterling could rise if the latest manufacturing PMI rises higher than expected in July, showing the sector is rebounding after the coronavirus crisis.

Euro (EUR) Slides as Eurozone Suffers Record GDP Contraction

The Euro (EUR) struggled against a handful of its rivals at the end of the week after data revealed the Eurozone’s economy sunk into deeper recession.

The Eurozone GDP fell by a record -12.1% in the second quarter causing Euro exchange rates to drop. However, further data showed that inflation unexpectedly rose year-on-year in July which limited EUR losses.

The single currency could make gains during today’s session as traders focus on the slew of upcoming manufacturing PMIs from across the bloc. EUR will rise if data reveals many EU countries saw a rebound in activity in July.

US Dollar (USD) Set for Worst Monthly Fall in a Decade

The US Dollar (USD) was able to make some gains at the end of the week but remained on course for its largest monthly fall in a decade.

Investors worried about the rebound in US economic activity being derailed by the coronavirus crisis as Congress still fails to agree on the next coronavirus fiscal stimulus package. Meanwhile, confidence in the US Dollar was also undermined after President Trump raised the possibility of delaying November’s election.

Risk appetite could rebound during today’s session, and weigh on the safe-haven ‘Greenback’. Market sentiment will improve if both Markit’s and the Federal Reserve’s preferred measure, the ISM manufacturing PMI, rises higher than forecast.

Canadian Dollar (CAD) Flat as GDP Rebounds in May

The Canadian Dollar (CAD) remained largely flat on Friday despite oil prices being on track for monthly gains thanks to a weaker US Dollar.

Meanwhile, the latest GDP data revealed that the Canadian economy rebounded by a better-than-expected 4.5% in May.

Meanwhile, if oil prices slump at the start of the week as markets continue to worry about the surge in Covid-19 cases weighing on a rebound in oil demand, the ‘Loonie’ will slide.

New Zealand Dollar (NZD) Retreats after Jump Against USD

The New Zealand Dollar (NZD) edged lower against a handful of its rivals as investors continued to worry about rising coronavirus cases around the world.

The ‘Kiwi’ was able to jump to fresh seven-month high against a weaker US Dollar (USD) after President Donald Trump suggested the November election should be delayed. However, NZD retreated from the high.

Looking ahead, growing coronavirus cases could continue to weigh on NZD, but a long-term bear run for USD could allow the ‘Kiwi’ to make further gains.

 

Upcoming Data:

08:30 AUD Ai Group Manufacturing Index (July) 52

09:00 AUD CommBank Manufacturing PMI (July) 53.4

11:30 AUD ANZ Job Advertisements (July)

17:15 EUR Spain Manufacturing PMI (July) 51.4

17:45 EUR Italy Manufacturing PMI (July) 50.7

17:50 EUR France Manufacturing PMI (July) 52

17:55 EUR Germany Manufacturing PMI (July) 50

18:00 EUR Eurozone Manufacturing PMI (July) 51.1

18:30 GBP Manufacturing PMI (July) 53.6

23:45 USD Markit Manufacturing PMI (July) 51.3

04/08/2020

00:00 USD ISM Manufacturing PMI (July) 53

Louisa Heath

louisa.heath@torfx.com


Related