The Australian dollar has been inundated with losses related to the outbreak of the coronavirus which originated in Wuhan, China, several weeks ago. The outbreak caused the Aussie to drop as the market’s sentiment switched to risk-off. As a risk sensitive currency this sent alarm bells ringing for the AUD and its investors. There has been volatility in the AUD concerning the coronavirus updates, with a sudden surge of optimism as scientists claimed to have found an effective treatment. But this spike in optimism has deteriorated, leaving the Aussie struggling this week. The outlook for the currency will largely depend on the control and containment of the disease, in which its spread and mutation is impossible to predict. Meanwhile, the AUD will look to find support from its upcoming home loans report.
Coronavirus Continues to Meddle With the Risk-Sensitive Australian Dollar
The outbreak of the coronavirus has rocked the global economy. With risk-sensitive currencies like the AUD and CAD being some of the most affected, they have struggled to overcome the hurdle. The outbreak sent the AUD spiralling as the global market shifted to a risk-off environment. Following a breakthrough claim from Chinese scientists that they had found an effective treatment for the virus, the AUD spiked as the risk sentiment eased off in hope that the disease could be controlled. However, since this claim, little positive news has surfaced which has allowed the number of cases to take the spotlight. Australia looks to continue to be affected by the virus until any signs of containment make headlines, for now traders look to flock back to safe-haven currencies like the USD and Swiss Franc.
UK Coronavirus Cases Double, Pressure Mounts on Struggling GBP
Meanwhile, for the pound, it has too been held back over fears of an outbreak on UK soil. The number of confirmed cases in the UK doubled from four to eight recently which has threatened the UK’s sensitive post-Brexit economy. The pound saw little movement yesterday after a lack of data releases which shifted the attention onto the coronavirus and the potential impact it could have on the British economy.
GBP/AUD Exchange Rate Could Sink on Weak Growth Data
Later today will see the UK’s GDP data for Q4 of 2019, as well as this, the UK’s manufacturing and industrial production data for December will also be unveiled. With the consensus suggesting there will be little change in the figures, the GBP could drop if the data fails to impress. However, a surprise spike in returned values could see the GBP rally, something that the currency needs after last week’s poor run.
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