AUD/USD extends slide to fresh daily lows below 0.7200
- AUD/USD turned south after climbing to fresh multi-month highs on Wednesday.
- New coronavirus lockdown measures are expected to weigh heavily on activity.
- US Dollar Index posts small daily gains, recovers toward 93.00.
After advancing to its highest level since February of 2019 at 0.7243 on Wednesday, the AUD/USD pair came under modest bearish pressure on Thursday and fell to a fresh daily low of 0.7175. As of writing, the pair was down 0.12% on the day at 0.7182.
Earlier in the day, Australian Prime Minister (PM) Scott Morrison said the Treasury had estimated Victoria's stage 4 lockdown is expected to cause the economy in the September quarter to contract by between $7 billion to $9 billion. “The effective unemployment numbers will be between 250,000 and 400,000,” Morrison added and caused the AUD to lose its strength against its rivals.
USD capitalizes on risk-off flows
On the other hand, the risk-averse market environment, as reflected by the sharp drop in major European equity indexes, is helping the greenback find demand as a safe-haven. Ahead of the US Department of Labor's weekly Initial Jobless Claims data, the US Dollar Index is up 0.1% on a daily basis at 92.90. In case Wall Street snaps its winning streak and falls on Thursday, the USD could continue to outperform its rivals and force the pair to push lower.
On Friday, the Reserve Bank of Australia will release its Monetary Policy Statement. Additionally, Trade Balance data from China will be looked upon for fresh impetus.
Technical levels to watch for