The Aussie took off to the upside after Tuesday’s RBA events, but it wasn’t able to hold onto it dominance starting on Thursday as broad risk sentiment flipped negative.
Australian Headlines and Economic data
On top of expectations set above that we won’t see additional stimulus from the RBA, we saw positive global risk-on vibes on the session that likely helped support the Aussie higher. It was likely a combination of the good news that the EU finally got a deal done on the recovery fund and positive expectations of another round of U.S. stimulus soon that had traders bullish on risk assets.
The Australian dollar topped against the major for the week during the U.S. trading session after global risk sentiment shifted negative. Growing U.S.-China tensions (U.S. charges two Chinese nationals in coronavirus vaccine hacking scheme, U.S. gives China 72 hours to shut Houston consulate) was the likely catalyst that the Aussie swiftly lower into the end of the session.
On top of the rising COVID-19 cases in Australia and disappointing business confidence data, global risk sentiment moved towards negative during the Thursday U.S. trading session, this time on signs of a weakening rebound of the U.S. jobs sector. U.S.-China tensions were also on the rise during the session to push risk sentiment negative, along with rising COVID-19 worries and U.S. big tech sector weakness to add pressure to the Aussie.
Negative global risk sentiment from Thursday flowed into Friday to likely bring in selling pressure on the Aussie as U.S.-China tensions were once again a focus, this time after China ordered the closure of a U.S. consulate in Chengdu and US Secretary of State Mike Pompeo urged China’s citizens to help ‘change the behaviour’ of their government.