Mixed performance with a net negative lean for the Aussie this week as coronavirus related headlines likely outweighed risk sentiment and a positive Australian jobs update.
Australia Headlines and Economic data
We saw somewhat of a move higher in the Aussie during the Asia and London sessions, likely supported by the improving Australian business confidence data but held back on the lockdown news. The Aussie may have also been supported by positive vaccine headlines (Russia has registered the world’s first coronavirus vaccine, J&J eyes one billion doses of potential COVID-19 shot in 2021) before turning lower during the U.S. session on negative risk sentiment (U.S. stimulus uncertainty, U.S. bankruptcies on track for 10-year high with more than 100 consumer companies already filing)
After a fall during the Asia session on disappointing Australian updates, the Aussie was able to bounce back during the U.S. session as risk sentiment improved thanks to improving global data (e.g., Industrial production up by 9.1% in both euro area and EU, U.S. consumer price index rose 0.6% m/m in July) and growing vaccine hopes.
RBA Governor Lowe says AUD exchange rate needs to be lower, but intervention would not be successful – the recovery in the Aussie against the majors seems to correlate with this event as traders priced in a lower probability of RBA currency intervention operations.