- AUD/USD plunges below 0.6600 as sentiment subsides.
- Recently, the outbreak of Covid-19 in China had investors worried by speculation that the government would re-impose restrictions.
- Traders’ attention is focused on Reserve Bank of Australia Governor Philippe Lowe’s intervention on Tuesday.
The Australian dollar (AUD) For the fourth day in a row, it fell into a risk-averse state after news broke that the latest Covid-19 outbreak in China caused three deaths over the weekend, as authorities eased some restrictions. Therefore, safety-seeking speculators bolstered the US dollar (USD) amid growing concerns over the reimposition of restrictions. AUD/USD is trading at 0.6590 after reaching a daily high of 0.6683.
Sentiment bolstered the US dollar on safe-haven flows
Wall Street denotes investor concern over the Covid outbreak, extending their losses on the day. A light economic calendar in the United States (US) saw the Chicago National Activity Index plunge into negative territory in October, to -0.05 from 0.17 in September. Although the US CPI and PPI reports for October were softer than expected, a strong US retail sales report raised the chances that the Fed will continue to tighten monetary conditions.
Over the past week, a number of Federal Reserve (Fed) officials have expressed the need to ease the pace of interest rate hikes, but said they will not pause. St. Louis Fed President James Bullard said rates are not “tight enough” and expects the FFR to top out at 5-6%.
Atlanta Fed President Raphael Bostic said he supports slowing the pace of interest rate hikes and anticipates further tightening of 75-100 basis points of the FFR.
Elsewhere, the Dollar Index (DXY), which measures the value of the dollar against a basket of six currencies, rose 0.80% to 107.823, putting a headwind for the Australian dollar.
Aside from this, an absent Australian economic calendar leaves AUD/USD traders leaning on market sentiment, hit by news from China. Of note, the People’s Bank of China (PBOC) kept the TPR unchanged at 3.65%, while iron ore prices added another piece to the puzzle that is weighing on the Australian dollar.
On Tuesday, Reserve Bank of Australia (RBA) Governor Philip Lowe will cross the wires and deliver a speech at the Australian Economic Development Committee’s annual dinner. He is expected to reiterate the RBA’s commitment to rein in inflation, though he is not likely to rock the boat. In the United States, the economic calendar will include the Richmond Fed’s manufacturing index, along with other Fed speeches.
AUD/USD technical levels
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
