12th August 2020 - Consolidates losses around one-week low beyond 0.7100

Good Morning,

Market Headlines

- US equity markets positive run out of steam overnight with the S&P 500 off 0.5%, while the NASDAQ also dropped 1.7%.

- NZ recorded its first cases of community spread of covid-19 for 102 days, with Auckland moving to stage 3 restrictions

- Commodities: Crude -1.1%, Copper 0.2%, Wheat +0.8%, Sugar +1.5%, Iron ore -2.5%, Gold $1916.


AUD/USD: 0.7135 – 0.7189

EUR/USD: 1.1731 – 1.1809

GBP/USD: 1.3047 – 1.3132

USD/JPY: 105.94 – 106.68

USD/CAD: 1.3271 – 1.3344

NZD/USD: 0.6572 – 0.6625

AUD/JPY: 75.99 – 76.33

AUD/NZD: 1.0835 – 1.0895

AUD Thoughts

- AUD/USD keeps pullback from 0.7134, bulls await clear direction to extend the three-day losing streak.

- Risk-tone recently dwindled amid US stimulus chatter, gold’s crash supersedes everything.

- Hopes of American economic rebound and no negatives on Sino-American trade deal favoured optimists earlier.

- Aussie Consumer Confidence, Wage Price Index can offer immediate direction, risk catalysts remain as the key.

Markets will keep eyes on domestic Consumer Confidence and the second quarter (Q2) Wage Price Index. While the former dropped to -6.1% in the previous month, the latter is expected to have receded to 0.3% from 0.5% QoQ. While the data suggests further hardships for the AUD/USD prices, recovery in the market sentiment could help the pair extend the latest pullback moves.

A one-month-old support line, currently around 0.7130 restricts the pair’s immediate downside ahead of 0.7065/60 area comprising July 24 low and June 10 high. Meanwhile, buyers will have to cross 0.7200 in a bid to regain the controls.

Event Risk Data Today

AU – Westpac Consumer Confidence

AU – 2Q Wage Price Index q/q and y/y

NZ – RBNZ Official Cash Rate and Monetary Policy Statement

UK – 2Q GBP q/q and y/y

EU – June Industrial Production SA m/m

US – July CPI m/m

US – Fed’s Rosengren, Kaplan and Daly speak