FX.co ★ AUD/USD. Coronavirus continues to put the strongest pressure on the Australian dollar

A $ 300 million a day is the "price" of quarantine restrictions that were introduced this month in the largest states of Australia. We are talking about the states of South Australia, Victoria and New South Wales. According to the country's treasurer Josh Frydenberg, the restrictions have an extremely negative impact on the country's economic growth, as well as on the unemployment rate.

This statement was made amid the worsening epidemiological situation in Australia. It should be recalled that the Australians actually defeated the pandemic at the beginning of the year: in a country of 25 million people, they only recorded 3 to 20 cases per day in the overwhelming majority – among those citizens who returned from abroad (that is, during quarantine). But since the beginning of July, the daily increase in the number of infected people has been consistently above 100, and is currently approaching 200 people. In particular, 167 new COVID-19 patients were registered in Australia yesterday. In 90% of cases, the newly diagnosed cases are the delta strain of coronavirus, which is more infectious and more dangerous than other strains.

According to local virologists, the epidemiological situation in the country will only worsen in the near future in view of low vaccination coverage and the increased contagiousness of the virus. The authorities have no choice but to extend the previously imposed lockdowns, despite the thousands of protests of local residents that took place last weekend in the largest cities of the country.

It can be recalled that quarantine has been in force in Sydney for about a month. The restrictions were recently extended until July 30, but according to Australian media, the measures are likely to be extended again for at least a few weeks.In Melbourne, the quarantine has already been extended for an indefinite period. The main rule of isolation in Australia is to stay at home. It is only possible to go outside only if necessary: to the grocery store, to get medical care, and for the purpose of outdoor sports.

Such trends can seriously "spoil the life" of an Australian, especially in the context of achieving goals in the labor market and inflation. For example, the June unemployment rate came out at low values (4.9%), and the overall indicator of the growth in the number of employed consistently comes out in the "green zone" for several months in a row. Moreover, the structure of the latest release suggests that the increase in the number of employees is due only to full-time employment, as the part-time employment showed a negative trend, collapsing into a negative area. This is important in the context that full-time work implies a higher level of wages.

It should be emphasized here that the market completely ignored the Australian Nonfarm data in June, amid the next coronavirus crisis. It is highly probable that the key inflation indicators (which will be published the day after tomorrow, on Wednesday) will also remain out of the attention of traders – if they come out in the "green" zone or at the level of forecasts. If the release disappoints investors, the Australian dollar will be under additional pressure. The consumer price index in quarterly terms shows a downward trend for the third quarter in a row. According to preliminary forecasts, the indicator will reach 0.7% in the second quarter of this year, which is slightly better than the result of the first quarter. The year-on-year growth is expected to rise (+3.8% in the second quarter compared to +1.1% in the first quarter). If the indicator fails to meet the forecast in quarterly terms, the Australian dollar will fall under a wave of sales again even if the indicator turns out to be in the "green zone" in annual terms.

In this case, short positions are in priority for the AUD/USD pair in the medium term. The coronavirus factor, which exerts the strongest pressure on the Australian dollar, does not loosen its grip: the epidemiological situation is deteriorating, forcing officials to extend the quarantine restrictions. There is another reason for concern: we are talking about the indicator of confidence in the business environment from NAB (National Australia Bank). According to experts of this largest Australian bank, consumer confidence declined to 17 points in the second quarter, while, according to forecasts, it should have reached the 21-point mark. And although this is a secondary factor, it complemented the overall negative fundamental picture.

From the point of view of technical analysis, the pair on the daily chart is located between the middle and lower lines of the Bollinger Bands indicator, as well as under all the lines of the Ichimoku indicator, which indicates the priority of the downward movement. The first support level (the downward target) is the level of 0.7300 – this is the lower line of the Bollinger Bands on D1.