- AUD/USD gradually inches closer to Monday’s flash crash low.
- Market’s risk-tone remains heavy amid a lack of confidence in global policymakers.
- WHO finally termed coronavirus as a pandemic, US President considering restricting non-essential travel from Europe.
With the global traders considering policymakers’ reactions to the coronavirus (COVID-19) as late and lacking required essence, AUD/USD remains under pressure below 0.6500, currently at 0.6485, at the start of Thursday’s Asian session.
Are they doing enough?
The BOE joined the league of super top-tier central bankers to announce a surprise rate cut to mitigate the negative implications of the virus, the Fed is likely to announce another rate cut of the month whereas the ECB may also stretch beyond interest rate cuts. Additionally, multi-billion dollar stimulus packages have been announced by Australia, Japan and various countries in Europe and Asia.
However, nothing of them could assure global investors that policymakers are doing enough to counter the deadly virus that has so far infected more than 120,000 people across the globe.
The reasons could be traced from the note in the Australia and New Zealand Banking Group’s (ANZ) report, “US equity markets had a difficult day as frustration at the lack of policy response from the White House to COVID-19 weighed. Not only has the US been slow in rolling out testing for the virus, but the promised fiscal response is also slow in forthcoming.”
That said, the World Health Organization (WHO) finally considered coronavirus as global pandemic whereas US President Donald Trump is ready to speak from his oval office around 01:00 AM GMT on Thursday about his much-awaited ‘major’ economic response to the epidemic.
Recently, Sara Cook from CBS tweeted, “(White House Adviser) Peter Navarro tells the Trump admin is looking to tighten domestic procurement through a 3-pronged strategy: ‘Buy American,’ streamlining regulations, & incentivizing new technologies. The EO targets ‘essential medicines,’ ‘medical countermeasures,’ & their supply chains.”
Amid all these, the US 10-year treasury yields gradually recover from their record lows to 0.878, up 12 basis points (bps), while Wall Street benchmarks turn lower by the end of their trading session on Wednesday.
It should also be noted that the US core inflation data failed to impress traders despite surpassing 2.3% forecast and prior to 2.4% on YoY. Also, the US Treasury Secretary Steve Mnuchin tried to portray a rosy picture of the upcoming tax relief from President Donald Trump.
Given the lack of major data/events on the economic calendar, which have so far gained a little importance due to the disease outbreak, market moves will rely mostly on the COVID-19 headlines.
Despite the broadly bearish sentiment, the AUD/USD sellers are showing signs of exhaustion on the charts, which in turn signals fresh strength in declines only below 0.6460 support level.