- Coronavirus Fears
- AUD100 Billion Loss Concern
- Weak NZ economic Data
AUDUSD and NZD/USD pairs were down Monday morning as the threat of a second wave of coronavirus pushed traders deeper into safe-havens. The greenback continued to strengthen across the board, sending the two pairs lower after weeks of gains.
The Australian dollar continued its bearish trend shedding more than 0.2% against the dollar as the New Zeeland dollar weakened by as much as 0.43%. The pairs have since retracted from three-month highs.
Weakness in the Australian Dollar looks set to persist in the week as traders switch attention to safe havens. The Australian economy faces a great test as a second wave of coronavirus would take a toll on China, its biggest trading partner.
A strengthened dollar as a safe haven should also fuel the bearish momentum on the AUD/USD pair. The pair had been on an impressive run in the wake of easing fears about coronavirus. Prime Minister Scot Morrison warning that a second wave of the pandemic could cause the economy more than AUD100 billion is not settling well with traders in the market, conversely the sell-off spree.
NZ Dollar Weakness
The New Zealand dollar, on the other hand, has struggled to stay above the 0.6500 level against the dollar, even on the country going for weeks without coronavirus infections or deaths. The slide stems from a fresh wave of risk aversion gripping the market as coronavirus continues to take a toll on some of the world’s biggest economies.
The dollar has continued to strengthen across the board, sending the NZD/USD pair lower. A string of weak NZ macro data has also continued to weigh heavily on the NZ dollar, leading to a slide in the exchange rate. For instance, the Food Price Index for May came in at -0.8% compared to 1% in April, PMI data, on the other hand, improved significantly to 37.2 from 25.9.