The AUD/USD continues to struggle to find acceptance above the 0.6700 mark on Friday. The Australian dollar is facing headwinds due to the risk-off sentiment, which has revived demand for the safe-haven US dollar.
The risk-off sentiment is fueled by concerns over the global economic outlook. The ongoing coronavirus outbreak and its impact on the global economy have caused investors to become more risk-averse. This has led to a flight to safety, with investors seeking out the US dollar as a safe-haven currency.
H2: Less Hawkish Fed Expectations Act as Headwind for the Buck
Despite the risk-off sentiment, expectations for a less hawkish Federal Reserve are acting as a headwind for the US dollar. The Fed has been signaling that it may be moving towards a more dovish stance, which has put pressure on the US dollar.
One of the factors contributing to the less hawkish stance is the Fed’s concern over the global economic outlook. The ongoing coronavirus outbreak has led to a slowdown in global growth, which could have negative implications for the US economy. In addition, the Fed has indicated that it is willing to let inflation run higher than its 2% target, which could lead to a more accommodative monetary policy.
H2: Risk-Off Mood Revives Demand for Safe-Haven USD and Caps Risk-Sensitive Aussie
The risk-off sentiment has revived demand for the safe-haven US dollar and capped the risk-sensitive Australian dollar. The AUD/USD has struggled to gain traction as investors flock to safe-haven assets.
In addition to the risk-off sentiment, the Australian dollar is facing headwinds due to concerns over the country’s economic outlook. Australia is heavily reliant on exports, particularly to China, which has been impacted by the coronavirus outbreak. This has led to concerns over the country’s economic growth, which could have negative implications for the Australian dollar.
H2: Conclusion
In conclusion, the AUD/USD continues to struggle to break above the 0.6700 mark due to the risk-off sentiment, which has revived demand for the safe-haven US dollar. However, expectations for a less hawkish Federal Reserve are acting as a headwind for the US dollar. While the outlook for the Australian economy remains uncertain, the Australian dollar may see some relief if global growth begins to pick up.
