After a disastrous week last week which sees AUD remain under pressure as the new trading week gets underway. Apples announcement that it will not hit sales targets, the Chinese Yuan dropped, shortly followed by the worries of the China travel ban which will likely threaten each of Australia’s top 5 exports (coal, iron ore, LNG, education and tourism). Meanwhile, cases of the Coronavirus have spiked in South Korea, who earlier last week stated a state of emergency concerning the disease. With crashes in both China and South Korea’s economies, AUD is likely to be impacted as two of their largest traders take hits to their productivity in the months to come.
Coronavirus Continues to Spread, With South Korea Confirming Spike in Cases Over the Weekend
The coronavirus shows little signs of stopping its spread across the globe. The latest news coming from South Korea has indicated that the number of confirmed cases in the country rose to 556 over the weekend. This figure was only at 31 the prior Tuesday. As a result, South Korean officials have announced a state of emergency within the country. Meanwhile over in China, the President Xi Jinping has called the coronavirus the ‘largest public health emergency’ since the founding of communist China. The death toll currently stands at 2,442 with 76,936 infections reported as of Sunday. News of the spikes in deaths and cases from not only China but surrounding countries will not do AUD any favours with investors as the market’s risk appetite is likely to mute following the news.
Pressure Mounts on RBA to Cut Rates, but the Bank Staves off Dovishness
Australia’s recent performance in the domestic market thanks to the coronavirus outbreak has put added pressure on the RBA’s odds of an interest rate cut in the months to come. However, the RBA’s recent interest rate decision showed the central bank to be less dovish than the market had anticipated. The bank reiterated that it was comfortable remaining on hold for now. Rate cut expectations were postponed from Q2 2020 to Q4 2020 after the meeting, and thus established a bottom for the currency.
This week will see little in the way of major data releases for AUD. Therefore, the coronavirus is likely to take centre-stage once more as investors hope for a calming in the market fears.
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