- Coronavirus Fears in the Market Reduce but WHO Says “No Therapeutic Treatment” for Virus
- RBA Optimism Drives AUD Upwards
The Australian dollar’s outlook appears to be looking clearer following recent reports from Chinese researchers which suggest that they may have found a ‘cure’ for the coronavirus which has ravaged the global economy for the first quarter. But could the optimism and reduced market fears be reckless? The World Health Organisation (WHO) stepped in on Wednesday to assure that the virus is still very much a threat as the media reports news of a ‘cure’. Meanwhile, the Australian dollar looks to benefit from the RBA’s recent optimism after their governor Philip Lowe noted that Australia is on track toward ‘full employment’ as well as the inflation target. After several weeks in the red, the Australian dollar will look to capitalise on current events in order to edge itself over GBP.
The coronavirus outbreak in China remains the single biggest threat to the global markets. Reports from China came on Wednesday suggesting that the research team at Zhejiang University had found an effective drug to treat sufferers of the virus. The news of this finding helped to alleviate tension in the global markets and saw the fears surrounding the virus mute a little. However, as the Chinese state media fills with claims that researchers have a ‘cure’ or treatment for the disease, the World Health Organisation (WHO) has stepped in to remind the world that the disease is still very much a threat and that there is still “no therapeutic treatment” for the virus – which has tempered the optimism slightly. Strategists at Saxo Bank have suggested to remain vigilant regarding the virus but note that there is certainly room for risk-correlated currencies like AUD to rally on news that we are getting past peak coronavirus concerns.
Meanwhile, the Australian dollar has received a further boost following the RBA’s recent optimistic stance on the economy’s outlook. RBA governor Philip Lowe said in a meeting at the Sydney Press Club that progress is being made towards ‘full employment’ alongside meeting the inflation target. He also hinted that a sustained deterioration is necessary on both fronts before the RBA would entertain a fourth cut to its interest rates. These words of positivity helped AUD rally as the question of an interest rate cut in the coming months looks to be ruled out.
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