AUD plunges as Cyberattacks and COVID 19 derail demand for risk

Daily Currency Update

The sell off across equities, commodities and risk assets continued on Monday amid an ongoing deterioration in risk appetite. Heightened fears the accelerated spread of the Delta variant will derail the global economic recovery have forced investors to retrace the reflation narrative and chase safe haven plays. The Australian dollar lost 1% through trade on Monday, plunging below 0.74 to touch intraday and year to date lows at 0.7327. The burgeoning spread of the delta variant, even among countries with high vaccination rates is alarming. The UK, US and Europe have all reported a surge in COVID 19 numbers and while this particular strain appears not to have developed a resistance to existing vaccines those swathes of the population that remain unvaccinated are increasingly vulnerable as hospital admission and deaths begin to rise. With the virus spreading largely unchecked among developing countries there is real concern new and more virulent variants will emerge. This is serious setback to the global economic recovery and all but squashes hopes the AUD would recover back toward 0.77 - 0.80 US cents come years end. With demand for risk continuing to falter the outlook for the AUD appears increasingly bearish.