AUD News: Australian Dollar Weekly Review - 25 September 2020

The Australian Dollar has fallen sharply during this week’s session as a clear trend towards safe-haven assets has left the risk-sensitive Aussie in the lurch.

This comes in response to heightened second wave fears, with an alarming resurgence of coronavirus cases in the UK and Europe, and the introduction of new restrictions stoking concerns over the trajectory of the global recovery.

The souring of market sentiment was also attributed to fresh tensions between the US and China as the two powers clashed at the annual UN General Assembly over Beijing’s handling of its coronavirus outbreak.

Further weakening the appeal of the Australian Dollar this week were also comments from the Reserve Bank of Australia’s (RBA) Deputy Governor, Guy Debelle, who suggested that intervening in the currency market remained a policy option for the RBA and that a weaker AUD exchange rate would be positive for Australia’s economy.

Looking ahead, the Australian Dollar is likely to remain vulnerable to additional losses as renewed coronavirus concerns look poised to batter market sentiment.

On the data front, there will be a couple AUD releases of note including Retail Sales and Business Confidence. Of the two releases, the focus is likely to be on August’s retail sales figures, with the Aussie likely to face some pressure if they confirm sales growth fell for the first time since April.

In broader trade, coronavirus concerns will no doubt continue to infuse volatility into the currency market, driving support for the US Dollar which could be reinforced by a strong US payroll reading. At the same time, the Eurozone’s latest CPI figures could exert pressure on the Euro if they reveal the deflationary pressure in the bloc continues to build.

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