10th August 2021 - AUD/USD bears moving in on critical daily support structure

Market Headlines

US bond yields rose further, supported by Fed commentary advocating QE tapering. The US dollar is slightly firmer, while the S&P500 is down 0.1% and commodities are lower on concerns stimulus may be reduced. US 2yr treasury yields rose from 0.20% to 0.22%, while the 10yr yield rose from 1.27% to 1.33%. Commodities, Brent crude oil futures fell 2.0% to $69, copper fell 1.3%, and gold fell 1.9%. Iron ore fell 3.5% to $164 – a four-month low.

Overnight Currency Range

AUD/USD 0.7328 0.7364

EUR/USD 1.1738 1.1769

GBP/USD 1.3841 1.3905

USD/JPY 110.03 110.37

NZD/USD 0.698 0.7025

USD/CAD 1.2532 1.2588

USD/CNH 6.474 6.4876

AUD/JPY 80.79 81.18

AUD/NZD 1.0473 1.0500

AUD Thoughts

A quiet day ahead on the Asian data calendar before German ZEW is released this evening. The survey of economic forecasts looks likely to acknowledge the German growth uplift in Q2 through a big jump in the “current situation” component. But the “expectations” sub index is very likely to retreat as fears around COVID variants intensify.

AUD/USD traded in a tighter 0.7328/0.7364 range with all key technical levels remaining intact. A further downside test, however, does seem likely with the broadly firmer USD and weakening commodity prices set to weigh. Demand rests in the 0.7290/00 region while offering interest should materialise as we approach 0.7400 and again at 0.7460.

Event Risk Data Today

Australia: The market will be gauging the most recent lockdown’s impact on business conditions in the July NAB business survey.

New Zealand: Market expects that July retail card spending will remain at a firm level but edge back by -0.5%.July saw the travel bubble with Australia being put on pause, and that’s likely to be a drag on hospitality spending (which had taken a step higher in recent months). Spending on durables, which has driven much of the recent strength in overall spending, is expected to remain robust.

Euro Area: The strength of the August ZEW survey of expectations will be tested by the spread of the delta variant.

US: Ahead of the Q2 update, productivity has been thrown around due to considerable labour market flux - the market is anticipating a rise of 3.2% in Q2. The market will be seeking insights into employment and prices from the July NFIB small business optimism survey (market f/c: 102.0). Finally, the FOMC’s Mester will discuss inflation risks.

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