Aussie upturn falters as risk off mood permeates markets

Daily Currency Update

AUD - Australian DollarThe Australian dollar moved lower through trade on Tuesday, having marked fresh year to date highs at 0.7040. In the absence of any headline news flows equities and risk sensitive currencies edged lower on the day as markets adopted somewhat of a risk-off mood, electing to absorb profits and cash in on recent gains. NAB reported a marginal improvement in business conditions up from April’s record low reading but still deeply entrenched in negative territory, with May’s report in line with readings recorded during the 90’s recession. The soft print forced investors to take stock and assess expectations for a swift and robust economic rebound pushing the AUD back below 0.69. Having touched intraday lows, the AUD then found support as USD momentum ran out of steam through the European session allowing the AUD to claw back above 0.6950. Optimistically Tuesday was the first time Australia has recorded no new community transmitted Coronavirus infections, with just two new cases reported nationally. The milestone is an incredible achievement, matched perhaps only by New Zealand, who is now coronavirus free. With state and federal governments pushing ahead with easing social distancing restrictions a sustained absence of community transmitted infections will likely mean barriers to re-opening are removed at an ever-increasing pace, helping bolster the economic recovery as we move into H2. Attentions today turn to the Fed rate statement, with the FOMC set to release its economic projections. With the US still in the throes of the Pandemic and social unrest building a dovish assessment could add mounting pressure on the world’s base currency.