29th July 2020 - AUD/USD waves around mid-0.7100 area with eyes on CPI


Good Morning,

Market Headlines

Equity markets took a step back as we come into the into the Fed's showdown this evening, Dow ended down 205 points, or 0.8%, S&P 500 fell 0.7% and the Nasdaq dropped 1.3%. Commodities, Brent crude futures 0.6% lower to $43.15, copper gained 0.6%, and iron ore rose 0.2% to $107.25. Gold rallied 0.8% to $1981an all-time high.

Currencies

AUD/USD: 0.7114 – 0.7167

AUD/EUR: 0.6071 – 0.6111

EUR/USD: 1.1699 – 1.1743

GBP/USD: 1.2839 – 1.2952

USD/JPY: 104.96 – 105.66

USD/CAD: 1.3346 – 1.3407

NZD/USD: 0.6634 – 0.6669

AUD/JPY: 74.97 – 75.31

AUD/NZD: 1.0723 – 1.0759

AUD Thoughts

- AUD/USD waves around mid-0.7100 area with eyes on Aussie CPI

- Risk-tone sours amid virus woes, uncertainty surrounding US fiscal package

- Fed announced extension of lending facilities from September to December

- Aussie Q2 CPI, risk catalysts can entertain markets ahead of the Fed decision

Looking ahead, Australia’s Q2 CPI is expected to slump from +0.3% to -2.0% whereas the RBA Trimmed Mean CPI may recede from 0.5% to 0.1% quarterly. FED’s meeting this evening is unlikely to see a major change in policy, but may include outcome based forward guidance focused on sustainably achieving the 2% inflation target and yield curve control.

AUD/USD - unless declining below 0.7065/60 support-zone, comprising Friday’s bottom and June month’s top, buyers are less likely to forget targeting 0.7200 threshold. Though, the pair’s further upside depends upon how well it can cross 0.7210 before targeting February 2019 top surrounding 0.7300.

Event Risk Data Today

AU – Q2 CPI

US – FOMC rate decision

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