The
Australian dollar dropped for a second straight session versus the U.S. dollar,
easing from its highest level since May 2018, after a report showing the
Australian economy posted its sharpest contraction on records in the second
quarter.
GDP
figures released on Wednesday showed that the economy contracted 7 percent,
following a fall of 0.3 percent in the first quarter. Analysts had predicted a
contraction of 6.0 percent.
The
sharp fall is considered the worst since first compiling data in 1959, as the
coronavirus hit the Australian economy and its main trading partner China,
where the economy is currently deemed in a technical recession after
contracting for two consecutive quarters.
Meanwhile,
the Australian dollar is trading lower against its U.S. counterpart at 0.7353,
while it hit a low of 0.7336.
On
the other hand, the dollar index resumed recovery after erasing its losses
yesterday, following an upbeat report showing that U.S. manufacturing expanded at
the fastest pace since 2018 in August.
The
dollar index has come under tense pressure after Fed Chair Jerome Powell vowed
to keep the loose monetary policy even if inflation surpassed the central bank’s
objective.
Later
in the day, eyes will focus on U.S. ADP non-farm employment and factory orders,
while the key focus will be on Friday’s NFP data for August.
Australia’s
S&P/ASX 200 index, however, edged up 1.8 percent to 6,063.20,
marking its largest one-day percentage rise since August.
Investors
focused on the positive signs of global economic recovery after the release of sanguine
manufacturing data from both U.S. and China on Tuesday.
Last
night, Wall Street finished at new record highs, led by sharp gains from technology
shares.
Adding to positivity
in the sentiment, US Dr Anthony Fauci mentioned that the Covid-19 vaccine
could be available at an earlier date if clinical trials were overwhelmingly
positive.