AUD/USD Exchange Rate Rangebound, Markets Anticipate Coronavirus Developments
The Australian Dollar to US Dollar (AUD/USD) exchange rate held steady today, with the pairing currently trading around $0.611.
The US Dollar (USD) has stabilised as the coronavirus (Covid-19) pandemic continues to limit investors’ appetite for risk sensitive currencies like the Australian Dollar and New Zealand Dollar.
Rodrigo Catril, a senior currency strategist at National Australia Bank in Sydney, commented:
‘After all, the [US Dollar] is a safe-haven currency. It’s reflecting caution, and an uncertain market where you’re seeing a lot of illiquidity.’
USD has continued to edge higher after last week’s record lows.
However, Friday saw US President Donald Trump sign the Federal Reserve’s record-breaking $2 trillion stimulus package into law.
With the US ramping-up its measures to bolster the economy through the coronavirus crisis, investors are again showing favour for the safe-haven of the ‘Greenback’.
However, US Dollar investors are becoming increasingly jittery over the US coronavirus developments after it was revealed that New York states’ death toll had passed 1,000 cases.
Any further signs of an increase in cases could spark a more draconian response from the White House and considerably weaken the US economic outlook.
AUD/USD Steady as ‘Aussie’ Investors Cautious as Australia’s Economic Outlook Dims
The Australian Dollar (AUD) improved today but many investors are remaining jittery as they anticipate another week plagued by coronavirus volatility.
The Organisation for Economic Co-operation and Development (OECD) has also predicted a grim outlook for the Australian economy, finding that the economy could be cut by 22% once a widespread shutdown had been put in place.
The OECD said in its report:
‘There will also be some variation in the timing of the initial impact on output across economies, reflecting differences in the timing and degree of containment measures. In China, the peak adverse impact on output is already past, with some shutdown measures now being eased.’
However, with China being Australia’s largest trading partner, there is some light at the end of the tunnel as the world’s second largest economy is now showing some sign of recovery after its earlier Covid-19 outbreak.
AUD/USD Forecast: US Dollar Could Rise as Investors Flock Back to Safe-Havens
Australian Dollar (AUD) investors will be looking ahead to tomorrow’s release of the Australian AiG Performance of Management Index for March. Any signs of deterioration would further darken Australia’s economic outlook as its largest sector flails amid the coronavirus pandemic.
However, should we continue to see an improvement in China’s economy we would see the ‘Aussie’ benefit as the two economies are largely linked.
The US Dollar (USD) will likely continue to rise, however, as markets prepare to face another week of volatility as the coronavirus continues to grip markets. As a result, the ‘Greenback’s safe-haven status will likely continue to grow.