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Australia’s jobs report, US coronavirus figures and Sino-Australian tensions are all in play to see if the slide seen in the AUD/USD pair last week was just a correction or the aussie has turned down, Yohay Elam, an analyst at FXStreet, reports. The pair has started the week on the back foot, down -1.11% at 0.6788.

Key quotes

“If China and Australia continue with unpleasant rhetoric but one that has no implications for trade, markets will likely learn to shrug it off. However, if Beijing threats with commerce action, the Aussie may shiver.” 

“Sino-American tensions – which have been on the backburner – may come to the forefront and weigh on markets. Also here, investors are mostly interested in the trade deal and less on accusations related to coronavirus, Hong Kong, or human rights in Xinjiang. In case the accord is in jeopardy, the mood may worsen and the Aussie may also struggle.” 

“Australia is set to announce another significant loss of jobs in May, following a decrease of nearly 600,000 in April. The Unemployment Rate is projected to leap, albeit on top of a return of the participation rate to pre-pandemic levels. AUD/USD is set to rock on any outcome, and investors will look for signs of recovery, amid the reopening.” 

“Signs of a second wave had begun emerging before the US racial discrimination demonstrations but may be exacerbated by them. If state governors reimpose lockdowns, the market mood may worsen and the safe’haven dollar has room to rise. If the uptrend halts, the greenback could slide.”

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