- AUD/USD reversal from 0.6560 extends to test one-week lows at 0.6400.
- Australian dollar falters with against a firmer USD on a risk-averse market.
- Aussie’s near-term target is 0.6000 – Danske Bank.
The Australian dollar has extended its reversal from 0.6560 highs on Monday, to test one-week lows at 0.6400. The Aussie has been hammered by risk aversion on the back of growing tensions between the US and China is set for a 1.5% depreciation this week.
The Aussie hurt by risk aversion and the US-China tensions
AUD/USD has declined in four of the last five days, undermined by the negative market mood. Investors’ hopes of a quick economic recovery after the COVID-19 have been dampened by concerns about a second wave of the pandemic, with infection numbers growing in the countries that started lifting restrictions.
Beyond that, the escalating tensions between US and China, and the bleak macroeconomic data on the aftermath of the coronavirus lockdowns have weighed market sentiment further, increasing selling pressure on the Aussie, with the USD favoured by its safe-haven status.
AUD/USD short-term forecast is 0.6000 – Danske Bank
The FX analysts’ team at Danske Bank see the Aussie dropping to 0.6000 to consolidate in the next three months, “We keep our short-term forecast at 0.60, which remains below the current spot level (…) We generally think AUD is getting somewhat ahead of where fundamentals anchor the spot and thus expect some consolidation on 1M and 3M.”