Australian Dollar Fundamental Forecast: Bearish
- Australian Dollar[1] remains on the back foot as Covid cases increase
- Hawkish RBA signal fails to lift rate bets as more lockdowns seen
- June’s employment report may underpin AUD if figure impresses
Increasing Covid Cases See New Wave of Lockdowns
Another down week for the Australian Dollar has left the currency near its worst position since December 2020 versus the Greenback. The Aussie[2] Dollar recorded a second consecutive week of broad losses against its major peer currencies, with AUD/USD[3], AUD/NZD[4], and AUD/JPY[5] falling 0.52%, 0.16%, and 1.37%, respectively. Prices recovered marginally on Friday, along with government bond yields, but will the slide continue next week? The prevailing headwinds suggest the late-week recovery may not continue.
A wave of Covid infections has swept through Australia, forcing policy makers to enact some of the toughest social-distancing restrictions seen this year. Sydney -- the largest city in the county, with a population of over five million – is entering the final week of a three-week lockdown. However, given the deteriorating conditions, that lockdown looks like it may be extended. The city saw 44 new cases on Friday.
Adding to the nation’s woes is the fact that only a little over 10% of the population is fully vaccinated, leaving few options outside economically crippling lockdowns. Saturday morning, New South Wales (NSW) Premier Gladys Berejiklian signaled that current restrictions are likely to remain in place beyond the scheduled deadline next Friday. The state leader said:
“Unless there’s a dramatic turnaround in the numbers, I can’t see how we’ll be in a position to ease restrictions by next Friday”
Australia Active Cases
Source: worldometers.info
