Risk-off: AUD forced into swift retreat as sentiment sours

Daily Currency Update

AUD - Australian DollarThe Australian dollar advance stalled on Wednesday as market demand for risk soured and investors sought haven assets. Having touched intraday and 5-week highs at 0.6450 the AUD suffered a sharp and swift correction, retreating through 0.6350 and 0.63 to touch intraday lows at 0.6283 before edging higher into this morning’s open. Westpac’s consumer confidence report fell to -17.7 in April a 14-point decline on March’s already soft read, while foreign direct investment in China was slashed, printing over 10% lower in March when compared with a year on year averages. The softening data point in China is in stark contrast to Tuesday’s better than anticipated Trade Balance report and perhaps offers a better insight into the bleak reality that fronts the worlds second largest economy. Despite having enjoyed a sustained upward push through the last 2 weeks the AUD has remained vulnerable to fluctuations in risk sentiment and Wednesday’s correction in risk demand serves to remind investors that extended AUD upside will be hard won. Attentions today turn to domestic labour market and employment data. The unemployment rate is tipped to near 8% by October and today offers the first real insight in to just how much damage has been inflicted on the economy as a direct result of the coronavirus pandemic. Conservative estimates have the unemployment rate jumping to 5.4% despite declines in the participation rate. A soft print could force the AUD back through 0.63/0.6280 and mark a shift in recent sentiment toward the currency.