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AUD/USD recovers modestly, trades near 0.6600

  • AUD/USD opened with a bearish gap on Monday.
  • US Dollar Index retraces large portion of Friday's drop.
  • Chicago Fed National Activity Index and Dallas Fed Manufacturing Index coming up.

Despite a modest rebound on Friday, the AUD/USD pair registered its lowest close since February 2009 at 0.6628. With coronavirus headlines triggering fresh risk-off flows at the start of the week, the pair opened with a bearish gap and stretched lower to 0.6583 before going into a consolidation phase. As of writing, the pair was trading at 0.6603, erasing 0.37% on a daily basis.

Risk aversion weighs on AUD

The sharp upsurge seen in the number of confirmed coronavirus infections in Italy and South Korea over the weekend reminded investors of the potential negative impact of the epidemic on the global economy.

While speaking at the G20 summit on Saturday, International Monetary Fund (IMF) Managing Director Kristalina Georgieva noted that the epidemic was expected to lower the global growth by 0.1% in 2020.

On the other hand, the sour market mood allows the USD to find demand on Monday to make it difficult for the pair to stage a meaningful recovery.

Ahead of the Chicago Fed National Activity Index and the Dallas Fed Manufacturing Index data, the US Dollar Index is up 0.25% on the day at 99.60. There won't be any macroeconomic data releases from Australia on Tuesday and investors are likely to remain focused on coronavirus headlines.

Technical levels to watch for

 

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