The financial impact

Governor Lowe is optimistic that the Australian economy can bounce back from the drought and the fires. That does hold up as the drop in farm output and consumption should be met by the reconstruction and recovery work that will take place shortly. However, the coronavirus outbreak sits, according to Alexandra Heath (Head of Economic Analysis at the Reserve Bank), in a 'different league' to the bushfire shock.


How long will the coronavirus linger?

Heath said that there is a difficulty not knowing how long the disruption will last and the latest economic forecasts only include first-round effects from travel disruptions known at the time. The downside risks to the forecasts, as Heath points out, is that they haven't really taken into account the fact that China sits in the middle of a lot of supply chains. Heath says that:

'It's starting to look a lot like the disruptions and these sort of supply chain spillovers are going to be a lot more serious than what we have'.

Furthermore, The current barring of flights from China into Australia is only going to be a further drag on the education and tourism sector. Remember, tourism is Australia's second-largest export earner. RBA interest rates are at record lows of 0.75% and factors are lining up for a weak 2020, Australian 10 year bonds are likely to remain bid in this environment and the longer the coronavirus drags on with containment and disruption issues the more it will eat away at Australia's economy which has around 30% of its GDP from trade with China.



Learn more about HYCM


High Risk Investment Warning: Contracts for Difference (‘CFDs’) are complex financial products that are traded on margin. Trading CFDs carries a high degree of risk. It is possible to lose all your capital. These products may not be suitable for everyone and you should ensure that you understand the risks involved. Seek independent expert advice if necessary and speculate only with funds that you can afford to lose. Please think carefully whether such trading suits you, taking into consideration all the relevant circumstances as well as your personal resources. We do not recommend clients posting their entire account balance to meet margin requirements. Clients can minimise their level of exposure by requesting a change in leverage limit. For more information please refer to HYCM’s Risk Disclosure.

Analysis feed

FXStreet Trading Signals now available!

Access to real-time signals, community and guidance now!

Latest Analysis

Latest Forex Analysis

Editors’ Picks

EUR/USD challenges weekly lows after mixed Durable Goods Orders

US Durable Goods Orders were up a measly 0.4% in August, missing expectations of 1.0%, although Nondefense Capital Goods Orders ex Aircraft jumped 1.8%. Equities bounce from lows, but the dollar maintains its strength.


GBP/USD loses 1.2700 as the dollar keeps rallying

GBP/USD approaches its weekly low at 1.2674 as demand for the American currency extends into the final trading session of the week. Hopes for a UK trade deal with the EU doing little for Sterling.


Gold: Finally some rest bite as XAU/USD holds at $1865 per ounce

It has not been the best week for the gold bugs as the yellow metal has fallen 4.36% since Monday. At the end of the week, the price has started to consolidate at the USD 1865 per ounce area. 

Gold News

Breaking: ​​​​​​​The IRS makes it hard to pretend you don’t have Bitcoin

The cryptocurrency holders might have a hard time trying to hide their Bitcoins or other digital assets. IRS considers changing the standard 1040 form by including a bold question on the front page:  At any time during 2020, did you sell, receive, send, exchange, or otherwise acquire any financial interest in any virtual currency? 

Read more

WTI moves back to flat and once again trades above $40 per barrel

It has been a mixed Friday for WTI as the price is moving sideways heading into the weekend. All of the excitement was last week when the OPEC+ JMMC decided to keep output levels at their current rate until December.

Oil News

Forex Majors