30th September 2020 - AUD/USD: Firmer above 0.7100 ahead of China PMI, US presidential debate


Good Morning,

Market Headlines

US equity markets were down on Tuesday as investors braced for the first of three Presidential election debates in the evening, 9pm ET, or 0100GMT. Markets are hesitant ahead of the first US presidential debate and watched for progress in talks for further fiscal stimulus in Washington. Consequently, the Dow Jones Industrial Average lost 0.48%, the S&P 500 dropped 0.48% and the Nasdaq Composite fell 0.29%. Commodities, Brent crude oil futures fell 4.0% to $40.75 on demand concerns, copper rose 0.2%, iron ore rose 1.6% to $118.90, and gold rose 0.8%.

Currency

AUD/USD: 0.7075 – 0.7138

EUR/USD: 1.1666 – 1.1746

GBP/USD: 1.2824 – 1.2902

USD/JPY: 105.53 – 105.74

USD/CAD: 1.3353 – 1.3419

NZD/USD: 0.6554 – 0.6603

AUD/JPY: 74.73 – 75.42

AUD/NZD: 1.0795 – 1.0822

AUD Thoughts

- AUD/USD stays on the front foot near one week high of 0.7138, up for third day in a row.

- US dollar’s heavy drop favours commodities and linked currencies.

- Market sentiment sours before the Presidential debate in America, challenges to US stimulus and virus woes also play their role.

- China’s PMIs will also be important to watch.

Markets are likely to remain cautious ahead of the key events at 01:00 GMT, namely the American presidential election debate and China’s NBS Manufacturing PMI for September. Also in the line is Beijing Caixin Manufacturing PMI, up for publishing at 01:45 GMT. While expectedly upbeat activity numbers from China may help AUD/USD to keep the latest positive performance, a softening stand of Republicans in the debate may trigger a safe-haven bid to the US dollar as Democrats will try hard to beat the Trump administration in all spheres and increase marked uncertainty.

AUD/USD bulls are currently targeting a 50-day SMA level of 0.7205 prior to eyeing the previous support line stretched from August 03, at 0.7250 now. On the contrary, sellers won’t risk entries unless the quote slips below the 100-day SMA level of 0.7018 on a daily closing basis.

Event Risk Data Today

New Zealand: Building permits are expected to fall further in August (prior: -4.5%, Mkt f/c: -5.0%). Final ANZ business confidence for September is anticipated to again highlight that confidence remains at historically low levels.

China: September’s PMIs are expected to show signs of recovery and strength of China’s growth opportunities ahead.

Euro Area: ECB President Lagarde will speak at ‘The ECB and its Watchers’ conference at 17:20 AEST.

UK: Final Q2 GDP (first estimate of -20.4%)

US: ADP employment has been materially weaker than nonfarm payrolls in recent months, and this is likely to again be the case in September. The third print of Q2 GDP is unlikely to see a material revision (prior and market f/c: -31.7%). Limited inventory is restricting momentum in pending home sales (prior: 5.9%, market f/c: 3.2%).

- The FED’s Kashkari(01:00 AEST), Bowman (03:40 AEST) and Bullard (03:40 AEST) will speak.

- The first US Presidential debate from Cleveland, Ohio will begin at 11:00 AEST Wednesday morning.

ACN: 615 699 888 | AFSL : 502711

Copyright © Navigate Global Payments All rights reserved.