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Australian dollar (AUD), a proxy for global risk sentiment and also for China’s growth outlook, will continue to have a tough time due to persistent coronavirus concerns, according to Westpac strategists.

AUD/USD is currently trading near 0.61 – down nearly 1,000 pips from highs near 0.70 observed on Feb. 1. Investors have aggressively sold risky assets over the last few weeks on fears the virus pandemic would push the global economy into recession.

The central banks have responded in an equally aggressive manner, but so far, the coordinated easing has failed to put a bid under the AUD and other pro-risk assets.

Key quotes

Fragile industrial commodities and travel bans threaten each of Australia’s top 5 exports (coal, iron ore, LNG, education, tourism), pointing to a collapse in the trade surplus starting in the Feb data. The extent and timing of likely RBA easing is a swing factor near term but the impact on Australia’s economy will be muted.