28th August 2020 - AUD/USD consolidates from fresh yearly high, 0.7300 in focus


Good Morning,

Market Headlines

Fed Chairman Powell speech indicated a shift in U.S monetary policy allowing for higher inflation and lower unemployment which would see lower interest rates into the future. U.S equities edged higher over the session with the S&P climbing .2%, while the Dow Jones was .6% higher. For commodities, Brent crude futures fell 1.3% to $45.05, copper rose 0.6%, iron ore fell 2.2% to $121.15, and gold fell 1.2%.

Currencies

AUD/USD: 0.7219 – 0.7290

EUR/USD: 1.1763 – 1.1903

GBP/USD: 1.3162 – 1.3285

USD/JPY: 105.60 – 106.71

USD/CAD: 1.3102– 1.3163

NZD/USD: 0.6600 – 0.6675

AUD/JPY: 76.65 – 77.42

AUD/NZD: 1.0922 – 1.0943

AUD Thoughts

- AUD/USD seesaws in a choppy range around 0.7250 after refreshing the highest levels since January 2019.

- Fed Chair Powell’s speech boosts the market’s risk appetite.

- Chatters surrounding the US stimulus deadlock offer intermediate moves.

- No major data at home, Jackson Hole updates, US statistics will be the key.

AUD went to a 19-month high, before stepping back from 0.7290. Looking forward, markets will keep eyes on the risk catalysts, namely the US stimulus updates, Sino-American tussle and comments from the Jackson Hole, for immediate direction amid a light calendar in Asia. During the US session, Chicago Purchasing Managers’ Index, Michigan Consumer Sentiment and Personal Spending-Consumption details will decorate the calendar.

An upward sloping trend line from August 05 joins the year 2019 top to highlight 0.7300 as the tough upside barrier. Though, any downside above a two-week-old support line, at 0.7254 now, can be considered ephemeral.

Event Risk Data Today

Eurozone: August economic and consumer confidence will benefit from summer and the recovery to date; continued gains are contingent on keeping new cases down (prior: 82.3, market f/c: 85.0; prior: -14.7 respectively).

CA: Annualised Q2 GDP is set to suffer from the COVID-19 pandemic, falling from -8.2% to -39.4%.

US: Personal income jolted lower in June as support from Government stimulus reversed. The market expects a more modest fall of -0.4% in July. July wholesale inventories are expected to fall further as durable stocks are depleted. Markets predict June’s rebound in personal spending will fade in July, a gain of 1.2%/1.5% forecast to follow June’s 5.6%. Like the CPI measure, the PCE deflators will report robust gains in July; though this is as a result of supply-side factors not resurgent demand. The Uni. of Michigan consumer sentiment index is expected to hover at 72.8 in August.

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