AUD/USD: Coronavirus Not Over, Australian Labor Data Awaited

The Australian dollar has benefited from receding fears about the coronavirus and optimism coming from New Zealand. The respiratory disease is likely to continue moving markets, but to make more way for the data, such as Australia’s jobs report.

This week in AUD/USD: coronavirus calm, RBNZ boost

The coronavirus’s death toll continues rising, and concerns remain elevated – but markets are significantly calmer. The deceleration in the number of new reported cases in China and the return of most of its factories to work has helped boost risk sentiment – pushing the Australian dollar higher. Moreover, Beijing has taken steps to aid companies hit by the impact of the virus by offering cheap loans, among other measures.

While the Australian economy is bracing for a hit from the respiratory disease in its top trading partner, investors perceive the damage to being contained. After dipping to decade lows, the Aussie has recovered.

A closer neighbor also had a positive effect on the A$. The Reserve Bank of New Zealand published forecasts that consisted of no rate cuts through 2020 – causing a surge in the kiwi and carrying the Aussie higher as well.

Across the Pacific, Jerome Powell, Chairman of the Federal Reserve, also seemed upbeat and contributed to the upbeat mood. While he said that the Fed is monitoring any spillovers from the virus, he saw no reason to see the expansion coming to an end.

US inflation data surprised to the upside with the Core Consumer Price Index holding onto 2.3% yearly, better than expected. However, retail sales missed with the Control Group remaining flat in the first month of 2020.

Circling back to Australia, economic figures were mixed. Home Loans rose by 3.5% in December, and Estpac’s Consumer Confidence gauge advanced by 2.3% – both better than expected. On the other hand, the National Australia Bank’s business surveys fell short of expectations and reflect caution. More significant figures are awaiting Aussie traders down the line.

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