15 Oct 2020
As we approach the end of the week, the Australian dollar reached a two-week low, following suggestions that the central bank could ease its monetary policy. Moreover, the British Sterling was boosted by Brexit developments but lost some value due to tighter coronavirus restrictions issued and the UK’s problems with Europe about trade talks.
Australia is looking into the purchase of longer-dated bonds to aid its economy. This was confirmed by the Reserve Bank of Australia’s Government Phillip Lowe. The Australian dollar is trading at a two-week low of 0.7068 against the USD.
Analysts said, “A broader risk-off tone has enveloped markets this morning. Steve Mnuchin’s comments about a U.S. stimulus bill now looking unlikely before the election were perfectly placed to unseat a market that had rallied hard on hopes of such stimulus, perhaps naively.”
The global recovery may be stalled by a new wave of lockdowns along with concerns about the U.S. stimulus to be set before the November 3rd election.
“On Brexit, we have seen negotiations with the EU go down to the wire. But the original deadline of 15 October looks difficult and we may see that postponed to end-October/early November. The next few weeks will be crucial.”
The GBP fell by 0.4% against the USD to 1.2961 and to 90.44 against the euro.