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The COVID-19 outbreak in Melbourne poses fresh risks to Australia’s recovery, Treasury Secretary Steven Kennedy told a Senate hearing in Canberra, adding that it suggests that the pandemic is not over yet.

Key quotes

high vaccination rates reduced health risks, which is important for confidence more broadly in the community.

“If people feel the health situation is well managed, and part of that is the vaccination program, they will feel confident to go about their activity and that will be strong for the economy.”

However, ANZ economist David Plank said that past surveys showed short lockdowns did not have a lasting impact on consumer sentiment.

Market reaction

AUD/USD is holding the higher ground above 0.7750, despite mixed Australian data, as the US dollar’s weakness remains the main driver so far this RBA Tuesday.