25th June 2020 - AUD/USD slumps below 0.6900 pressured by risk-off flows


Good Morning,


Market Headlines

Markets refocused again on the increased Covid cases in some US states, as well as US-EU trade tensions, pushing the S&P500 2.6% lower. On the commodities front, Brent fell 6.3% to $39.95, copper fell 0.6%, iron ore rose 2.2% to $103.35, and gold fell 0.1%.


Currencies

US dollar index rose 0.5% on the day.

EUR retraced down from 1.1320 to 1.1255.

Safe haven currencies CHF & JPY performed best with USD/JPY up from 106.50 to 107.01.

AUD declined from 0.6945 to 0.6865.

NZD dropped from 0.6470 to 0.6405.

AUD/NZD traded between 1.0705 & 1.0750, maintaining yesterday’s 0.5c gain, post the RBNZ’s warning about the high NZD.


AUD Thoughts

AUD/USD slumps below 0.6900 pressured by risk-off flows

US Dollar Index advanced above 97 on risk aversion.

Increased number of confirmed coronavirus cases in US weighs on sentiment.


After falling toward 0.6900 in the early European session, the AUD/USD pair went into a consolidation phase but came under renewed bearish pressure in the American trading hours. As of writing, the pair was down 0.75% on the day at 0.6870. DXY advances above 97.00 - The broad-based USD strength on Wednesday seems to be the primary driver of the pair's movements. The risk-averse market environment amid coronavirus fears is boosting the demand for the safe-haven greenback. At the moment, the US Dollar Index is up 0.44% on the day at 97.10.


The latest data from the US showed that the confirmed COVID-19 cases in Florida increased by 5.3%, hospitalizations in Texas rose by 7.3% and the coronavirus infections in California jumped to 7,149 from 5,019 on Tuesday. Confirmed the intense flight-to-safety, major equity indexes in the US are losing between 1.3% and 2.45%.


AUD/USD offering interest remains thick ahead of 0.6970-80 while demand in the 0.6820 region should slow any fall.


Event Risk Data Today

New Zealand: May Trade data is out with market expectations of another surplus number coming in somewhere similar to April’s outcome of NZ$1,267mn (Imports still remain suppressed under COVID-19.)


Australia: May job vacancies


US: Wholesale inventories for May is out which will be followed by the final estimate for Q1 GDP (market expectations to be -5.0% annualised). Markets also expect sluggish momentum on initial jobless claims. Kansas City Fed survey is expected to produce positive survey results for the month (prior: -19, market f/c: -7). FOMC member Bostic will participate in a virtual Q&A on the economy (01:00 AEST).


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