AUD/USD Extends Tuesday’s Decline
The AUD/USD pair struggles to regain the 0.7600 level at the start of the European session on Wednesday. Earlier in the day, it hit a fresh seven-week low around the 0.7585-80 region.
The pair is extending Wednesday’s 1.50% selloff as general risk aversion in global markets continues to prop up demand for the safe-haven US dollar.
Several factors remain at play this week that threaten the global economic recovery. They reduce investor appetite for perceived riskier assets such as the Australian dollar.
One of them is the third wave of coronavirus in Europe. Meanwhile, concerns about the side effects of covid vaccines have led many key economies to halt their vaccination campaigns.
In addition to the markets’ nervousness, China’s growing concerns weigh on the Australian dollar. The United States, the European Union, the United Kingdom, and Canada have sanctioned Chinese officials for human rights abuses.
Meanwhile, Bloomberg reports that Beijing has failed to meet the US purchasing target agreed to in phase one of the trade deal, contributing to the AUD/USD slide.
On the other hand, markets have ignored upbeat Australian trade data, and the release of the manufacturing PMI as a weakness in the NZD also remains a drag on the AUD.
Critical US macroeconomic data will be released today ahead of Fed Chairman Jerome Powell’s second statement. On Tuesday, Powell repeated that an expected rise in inflation in the short term would be transitory.
Australian economy recovered healthily from the coronavirus pandemic. The country received a boost to its vaccine rollout efforts earlier this week. However, as previously mentioned, the shot has run into road bumps, which may explain some of the Aussie-Dollar weaknesses.
Investors worry about Europe’s economic reopening
Concerns over the global economic recovery progressed on Tuesday. According to the National Institute of Allergy and Infectious Diseases, AstraZeneca’s disclosures may have included outdated data after obtaining information from the company’s independent data-monitoring board.
The vaccine error caused energy markets to dive. Crude and Brent oil prices sank over 6%. The brutal hit on oil prices fell the small-cap Russell 2000 index over 3.5% during Tuesday’s New York trading session. The tech-heavy Nasdaq dropped 0.53% lower. Meanwhile, the S&P 500 and Dow Jones fell 0.76% and 0.94%, respectively.
Elsewhere, the safe-haven US Dollar moved higher in response to the risk aversion introduced into markets.
Investors are concerned that Europe’s economic reopening will be curbed. It’s because the AstraZeneca shot is the primary vaccine in the continent. Besides, treasuries received strong bids across the curve. It pushed yields lower.
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