23rd September 2020 - AUD/USD: Depressed near monthly low under 0.7200, eyes Aussie Retail Sales

Good Morning,

Market Headlines

Wall Street managed to please the buyers after a few days of disappointment whereas the US 10-year Treasury yields also paused further downside around 0.67%. On the commodities front, Brent crude oil futures rose 0.6% to $41.70, copper rose 1.5%, iron ore fell 2.4% to $116.70 (a six-week low), and gold fell 0.5%.


AUD/USD: 0.7155 – 0.7234

EUR/USD: 1.1692 – 1.1767

GBP/USD: 1.2711 – 1.2865

USD/JPY: 104.41 – 105.08

USD/CAD: 1.3285 – 1.3345

NZD/USD: 0.6622 – 0.6786

AUD/JPY: 75.08 – 75.70

AUD/NZD: 1.0796 – 1.0837

AUD Thoughts

- AUD/USD fades pullback moves from multi-day low of 0.7153 around 0.7180/75.

- Recovery in market sentiment fails to help the bulls as US dollar stays strong.

- RBA Deputy Governor triggered hopes of central bank intervention despite only marking it as the option available to use.

- Aussie PMIs, Preliminary Retail Sales for September are in the spotlight, for now.

Preliminary readings of the Commonwealth Bank’s (CBA) September month PMIs will precede the initial estimation of the current month Retail Sales. While the activity numbers are likely to remain below 50 to suggest further contraction, recovery in the coronavirus (COVID-19) conditions in Victoria might have helped Retail Sales to inch up from 3.2% prior.

Given the latest swing in the market’s mood, positive numbers from home become necessary for AUD/USD bulls to avoid the further downside. Though, the markets love for the greenback, amid broad pessimism led by the pandemic, dims prospects of any such events during the busy day.

The pair’s sustained trading below 50-day EMA, at 0.7175 now, will make it vulnerable to revisit the August 20 low near 0.7130 ahead of challenging the 0.7100 threshold. Meanwhile, an ascending trend line from August 03, currently around 0.7230, follows 0.7200 round-figures to restrict short-term AUD/USD upside.

Event Risk Data Today

Australia: PMIs, Preliminary Retail Sales for September

New Zealand: The RBNZ September policy decision. No change in the OCR or LSAP is expected, given August’s LSAP expansion.

Japan: The manufacturing and services PMIs (prior: 47.2 and 45.0 respectively).

Eurozone: The Markit manufacturing and services PMIs for the Eurozone and Germany (Eurozone - prior: 51.7, market f/c: 51.9; prior: 50.5, market f/c: 50.6 respectively).

UK: September manufacturing and services PMIs are expected to fall from 55.2 to f/c 54.0 and 58.8 to f/c 56.0 respectively.

US: The FHFA house price index continues to post solid gains, with transactions supported by low mortgage rates (prior: 0.9%, market f/c: 0.4%). The Markit PMIs are anticipated to remain expansionary in September as business confidence improves (manufacturing – prior: 53.1, market f/c: 53.5; and services – prior: 55.0, market f/c: 54.6). FOMC Chair Powell will appear before the House Panel on Covid-19 (00:00 AEST), his second appearance in as many days. The FOMC’s Mester (23:00 AEST), Evans (01:00 AEST), Rosengren (02:00 AEST), Kashkari (03:00 AEST), Bostic (03:00 AEST), Quarles (04:00 AEST) and Daly (05:00 AEST) are also all due to speak.

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