19th August 2020 - AUD/USD wobbles under 0.7250 after refreshing 1-½ year high


Good Morning,

Market Headlines

Sentiment was upbeat, the S&P500 currently up 0.3% to a record high. The defensive USD fell sharply to a two-year low, while bond yields fell. Commodities: Brent crude futures fell 0.3% to $45.25, copper rose 2.7%, iron ore rose 5.0% to $127.60 – the highest since 2014, and gold rose 0.9%. The GDT dairy auction fell 1.7%, with whole milk powder down 2.2%.

Currencies

AUD/USD: 0.7216 – 0.7264

EUR/USD: 1.1883 – 1.1966

GBP/USD: 1.3151 – 1.3276

USD/JPY: 105.28 – 105.65

USD/CAD: 1.3151 – 1.3204

NZD/USD: 0.6543 – 0.6609

AUD/JPY: 76.08 – 76.54

AUD/NZD: 1.0958 – 1.1043

AUD Thoughts

- AUD/USD bulls catch a breather around 0.7235-50 following its run-up to fresh high in 18.5 months.

- US dollar weakness propelled commodities and Antipodeans, equity gains add strength to the upside momentum.

- Virus cases in Australia’s Victoria drop to the lowest in a month, US opposition Democratic Party hints breaking stimulus deadlock.

- Australia’s Westpac Leading Index will decorate the calendar in Asia, markets will look to FOMC minutes tonight.

Having breached February 2019 month top, AUD/USD is set to challenge the previous year’s peak surrounding 0.7300. On the contrary, 0.7190 and 21-day SMA near 0.7165 can offer immediate supports.

Event Risk Data Today

AU – Westpac-MI Leading index is improving but still in deep recessionary territory (prior: -4.44%).

UK – July CPI Market predicts CPI inflation will fall further from 0.1% to -0.1% in July.

EU – July CPI dipped into negative territory in June, and the market expects it to linger there for the foreseeable future (prior and market f/c: -0.3%)

CA – July CPI annualised CPI inflation remains weak (prior: 0.7%, market f/c: 0.6%).

US – FOMC minutes will be released today, providing detail on risks and possible policy responses. The FOMC’s Barkin will speak (05:00AEST).

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