14th October 2020 - AUD takes a hit on the back of the China coal-ban talk yesterday


Good Morning,

Market Headlines

The market remained cautious with the continued stalemate in US fiscal package negotiations, vaccine trial setbacks, and rising Covid cases in Europe. The S&P500 is down 0.4%, bond yields are lower, and the defensive US dollar is higher. US 2yr treasury yields fell from 0.15% to 0.14%, while the 10yr yield fell from 0.77% to 0.72% Commodities, Brent crude oil futures rose 1.8% to $42.50, copper fell 0.7%, iron ore fell 2.4% to $121.05, and gold fell 1.5%.

Currency

AUD/USD: 0.7151 – 0.7203

EUR/USD: 1.1730 – 1.1799

GBP/USD: 1.2922 – 1.3066

USD/JPY: 105.34 – 105.62

USD/CAD: 1.3100 – 1.3146

NZD/USD: 0.6633– 0.6670

AUD/JPY: 75.43 – 75.94

AUD/NZD: 1.0768 – 1.0812

AUD Thoughts

AUD/USD ranged between 0.7151/.7212 yesterday with selling interest predominating any demand. Dented by coal-ban talk yesterday and targets 0.7100 during the next few days. Offering interest likely remains thick between 0.7210/20.

Event Risk Data Today

Australia: Consumer Sentiment surged 18% in September as the Victorian outbreak was brought under control. The October release will capture reactions to the Federal Budget unveiled on October 6.

Japan: Industrial production saw preliminary August gains of 1.7%, boosted by increased car and electronics output. Production is still historically weak, down 13.3%y/y, at its lowest level since 2011.

South Korea: The BoK will remain cautious on the outlook and the risks.

Europe: The market expects industrial production growth to slow in August after three months of rapid recovery (prior: 4.1%, market f/c: 0.8%).

US: The FOMC’s Daly (11:00 AEST), Barkin (23:35, 05:00), Clarida (0:00), Quarles (01:30, 06:00) and Kaplan (06:00) will speak.

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