AUD/USD has dropped below 0.72 as the US dollar powered ahead and Australia’s coronavirus woes sparked another round of growth forecast downgrades. The aussie is set to remain under pressure and may test the 0.7000 handle, according to economists at Westpac.
See: AUD/USD to sink towards the 0.7000 level – Commerzbank
Data is just starting to show the impact of the lockdowns
“It is hard to see much of a reversal near-term. Most attention will be on the daily covid updates, with NSW warning of new record high daily cases ahead and VIC struggling to extinguish its relatively small cluster.”
“The July labour force survey showed a rise in Australia underemployment from 7.9% to 8.3%. This is a much better guide to the current job market than the 4.6% headline unemployment rate. But even more, telling is the 7% slump in NSW hours worked.”
“In the week ahead, the fortnightly payrolls series could be brutal, while Q2 construction and capex will be seen as very old news. Q3 GDP (due 1 Dec!) is the hot topic, with Westpac now on -2.6%qtr.”
“The steady drip of grim local news and a firm USD should keep AUD/USD under pressure, eyeing 0.7100 then a test of 0.7000 multi-day/week.”