21st September 2020 - AUD/USD: Challenges to risk probe the bulls attacking 0.7300


Good Morning,

Market Headlines

US equity markets fell, the S&P500 down 1.1% to a six-week low. Some attributed the fall to quarterly expiration of equity derivative contracts. Commodities, Brent crude oil futures fell 0.4% to $43.15, copper rose 1.1% to a two-year high, iron ore rose 2.6% to $124.65, and gold rose 0.3%.

Currencies

AUD/USD: 0.7283 – 0.7326

EUR/USD: 1.1826 – 1.1870

GBP/USD: 1.2914 – 1.2999

USD/JPY: 104.27 – 104.70

USD/CAD: 1.3147 – 1.3209

NZD/USD: 0.6756 – 0.6798

AUD/JPY: 75.93 – 76.69

AUD/NZD: 1.0768 – 1.0796

AUD Thoughts

- AUD/USD jumps 15-pips at the week’s start after ignoring the red line during the previous week.

- Upbeat comments from PM Morrison and Chinese President Xi Jinping favoured the early bulls despite virus woes, Brexit worries.

- US election jitters, Sino-American tussle and the stimulus deadlock challenge the optimists.

- No major data on the radar but Fed Chair Powell’s speech and risk catalysts will be the key.

During the last weekend, the Fed-led optimism joined upbeat employment data from Australia to keep AUD/USD on a positive side. Though, Wall Street had to suffer and so do the US 10-year treasury yields.

Moving on, the economic calendar has nothing major to cheer and hence the key risk catalysts like a virus, Brexit, US stimulus and the Sin-American tussle will be in the spotlight. Though, Federal Reserve’s Chairman Jerome Powell’s speech at 14:00 GMT will be the key to watch. Traders will look for additional clues of the Fed’s optimism while the subject matter is rule-making for the Community Reinvestment Act.

Unless breaking the 0.7340-46 area, comprising August 31 low and highs marked since September 03, the risk of AUD/USD price drop to refresh the monthly low of 0.7191 can’t be ruled out. However, a 21-day SMA level of 0.7277 can offer intermediate strong support during the pair’s weakness.

Event Risk Data Today

UK: Pent-up demand supported a mini-boom in Rightmove house prices, though momentum levelled out in August (prior: -0.2%).

US: The market expects the Chicago Fed activity index to hold around 1.2% as employment and production indicators remain soft. Fed Chairman Jerome Powell’s speech at 14:00 GMT

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