Australian Dollar May Extend Fall Despite Easing COVID-19 Restrictions

 

AUDUSD

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AUSTRALIAN DOLLAR FUNDAMENTAL FORECAST: NEUTRAL

  • The planned easing of coronavirus restrictions in Melbourne – Australia’s second largest city – may temporarily halt the Australian Dollar’s retreat from yearly highs.
  • Growing expectations that the RBA will cut rates in October could continue to weigh on AUD.

The Australian Dollar is at risk of extending its retreat from the yearly high set on September 1 ahead of the Reserve Bank of Australia’s interest rate decision on October 6, despite the planned easing of coronavirus restrictions in Melbourne – Australia’s second largest city.

 

 

MELBOURNE TRANSITIONING TO NEXT STAGE OF REOPENING ROADMAP MAY UNDERPIN AUD

With the 14-day rolling average of COVID-19 infections falling to 25.1 and the virus growth rate drifting below 0.5, Melbourne is poised to move to the second stage of Victorian Premier Dan Andrews’ “reopening roadmap” on September 27.

However, Andrews warned that “Sunday will not be a day of massive steps [and] is not a day when we essentially throw the doors open," adding that instead it will be a series of “steady and safe steps” to ensure that there is a “gradual and continued decline in these numbers."

Although the next phase of the roadmap is unlikely to see a return to normalcy in Australia’s second largest city, the consistent decline in infections combined with the gradual easing of restrictions could underpin the Australian Dollar against its major counterparts in the near term.

Australia Daily COVID Cases Melbourne

RBA EXPECTED TO CUT RATES IN OCTOBER

Having said that, recent comments from the Reserve Bank of Australia’s Deputy Governor Guy Debelle appear to suggest that the central bank could ease monetary policy settings further in October “given the outlook for inflation and employment is not consistent with the Bank’s objectives over the period ahead."

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