The aussie has recovered after hitting a low of 0.5509 in March and is now trading at 0.6863. Joseph Trevisani, an analyst at FXStreet, believes the worst for the AUD/USD pair is not behind yet as its main trade partner, China, is severely affected by the coronavirus.
Key quotes
“Primary in the Australian dollar’s problems are its twin positions as a resource currency and an economy closely tied to China. The global slowdown from the coronavirus lockdowns has reduced growth and resource demand in every industrial country and though many have started to permit businesses to reopen and lift social restrictions unemployment and lower consumption will keep resource demand from the factory sector far below normal for a considerable period.”
“The Australian resource industries, which are the largest part of the nation’s exports and earnings, are facing a prolonged bout of weak prices and limited demand.”
“In the longer context of the two years of the US-China trade dispute the AUD/USD has made a respectable return to about 50% of the January 2018–March 2020 decline at 0.5509. But in a historical context the aussie is near the bottom of its decade range at the 23.6% Fibonacci retrace of the July 2011 to March 2020 devaluation sit at 0.6866.”
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