- The AUD / USD reversal of 0.6560 extends to test the week lows at 0.6400.
- The Australian dollar hesitates against a firmer dollar in a market that is reluctant to take risks.
- The Aussie’s short term goal is 0.6000 – Danske Bank.
The Australian dollar extended its reversal of the highs of 0.6560 on Monday, to test the one-week lows at 0.6400. the Aussie has been hammered by risk aversion following mounting tensions between the United States and China expected to depreciate 1.5% this week.
Aussie hurt by risk aversion and US-China tensions
AUD / USD has declined in four of the past five days, undermined by negative market sentiment. Investors’ hopes for a rapid economic recovery after COVID-19 have been dashed by concerns over a second wave of pandemics, with the number of infections increasing in countries that have started to lift restrictions.
Beyond that, the escalating tensions between the United States and China and the grim macroeconomic data on the aftereffects of coronavirus blockages further weighed on market sentiment, increasing the sales pressure on the Australian, the USD being favored by its safe haven status.
AUD / USD short term forecast is 0.6000 – Danske Bank
Danske Bank’s team of FX analysts sees the Aussie drop to 0.6000 to consolidate over the next three months. “We maintain our short-term forecast at 0.60, which remains below the current spot level (…) We generally think that the AUD is ahead of the fundamentals that anchor the spot and therefore expect consolidation on 1M and 3M . “