The Australian dollar ended lower last week due to concerns about the economic impact of the corona virus and future Reserve Bank of Australia (RBA) policies. Last week the Aussie was pressured by a stronger US Dollar as traders turned to the US Dollar as a safe-haven due to concerns about the effects of the Coronavirus.
But last Friday, AUD/USD rose after US economic data fell in the manufacturing and service sectors. Last week, the AUD/USD weakened from the level of 0.6733 to the lowest level at the level of 0.6585, then turned corrected up to the level of 0.6638.
The economy this week is still being affected by the coronavirus, a report on the Manufacturing PMI and Non-Manufacturing PMI to be released by China could reveal the biggest impact of the coronavirus on Saturday.
Traders in Australia will get the chance to react to the latest data on Private Capital Expenditures. It is expected to show an increase of 0.5%, up from -0.2% through this report.
The Reserve Bank of Australia (RBA) this year triggered expectations of lower interest rates which has pushed the AUD/USD to weaken. The RBA left interest rates at a record low of 0.75% at the meeting, but the minutes showed that the policy was prepared to facilitate the next policy.
Unemployment Increases, AUD/USD Continues to Decrease
Although Australian employment exceeded expectations for the third consecutive month, the unemployment rate remained higher than analysts had predicted. This is what drives the Aussie continues to weaken and trigger more arguments to provide stimulus.
The Australian Bureau of Statistics (ABS) created 13,500 new clean jobs in January, following a strong 28,900 rise in December and beating estimates at 10,000. All of this increase came from full-time employment, which jumped 46,200 while part-time employment fell 32,700.
An estimate of unemployment will rise to 5.2%. But in reality, the unemployment rate jumped from 5.1% to 5.3% in December due to more job seekers, despite an increase in employment.
Although the AUD/USD movement rebounded last Friday, the AUD/USD trend this week tends to remain down because investors tend to remain nervous about the coronavirus. Global growth is certain to remain down to zero in the first quarter, even if reports begin to show the coronavirus outbreak is receding. A short-term blow to the Australian economy seems inevitable.
AUD/USD Remains the Weakest Pair
Aussie in the AUD/USD pair remains among the weakest US dollar rivals because the Australian economy is being hit by Chinese unease. The Japanese yen recovered only slightly after collapsing in the previous days, amid recession fears in Japan.
Aussie in AUD/USD pair is still in the range of the lowest position for more than 1 decade, although it rose moderately overnight by the weakening position of the US dollar. There is no new catalyst from within Australia that will influence investor sentiment, so see the news related to concerns about the spread of the COVID19 virus.
The risk asset condition was pressured by news of rising casualties in Italy, India and South Korea, making US bond yields and the American stock market freefall. The drop in the pair was weighed down by fears the Coronavirus in China reached its lowest level at 0.6585 (the lowest since March 2009).
Technically, according to Analyst Research Center Vibiz AUD/USD pair can move positively and towards the position of the resistance gate at 0.6610 and if it breaks it will climb to positions R1 to R2.
But if the pair is pressed back to the position towards the position of 0.6590, if it goes through it will slide to S1 (0.6585) to S2 (0.6570). Every week, the AUD/USD pair is on track for a very strong bearish weekly closing and adds a negative signal.
