31st August 2020 - AUD/USD bulls keep 0.7400 on radars with eyes on China PMIs


Good Morning,

Market Headlines

Sentiment remained upbeat, the S&P500 rising 0.7% to a fresh record high, US 2yr treasury yields fell from 0.16% to 0.14%, while the 10yr yield fell from 0.78% to 0.71%. Commodities, Brent crude oil futures fell 1.3% to $45.80, copper rose 0.9%, iron ore rose 1.7% to $123.15, and gold rose 1.8%.

Currencies

AUD/USD: 0.7302 – 0.7367 (a high since December 2018)

EUR/USD: 1.1867 – 1.1920

GBP/USD: 1.3258 – 1.3357

USD/JPY: 105.20 – 106.21

USD/CAD: 1.3047– 1.3125

NZD/USD: 0.6670 – 0.6744

AUD/JPY: 77.06 – 77.59

AUD/NZD: 1.0905 – 1.0955

AUD Thoughts

- AUD/USD bulls keep 0.7400 on radars with eyes on China PMIs

- US Dollar weakness joins upbeat equities and commodities to favour the Aussie bulls.

- Sino-American tussle heats up and so does virus updates, US policymakers still jostling over the stimulus package.

- China’s NBS Manufacturing PMI may drop to the lowest in six months, second-tier Aussie data also up for release.

AUD/USD is up for the fifth consecutive monthly gains while taking rounds to 0.7365 at the start of today’s trading session. Looking forward to China’s PMI data for August for fresh direction. Also in the line is Domestic TD Securities Inflation for the current month. Forecasts suggest the key NBC Manufacturing PMI drop to 48.7 versus 51.1 whereas the Non-Manufacturing PMI may weaken to 52.1 from 54.2 prior. The manufacturing activity figures, if matching the forecasts, will mark its first contraction since February and can trigger the pair’s fresh downside.

With the RSI flashing overbought signals, an ascending trend line from March 2020 and December 2018 top near 0.7400 becomes the key resistance to watch for the bulls ahead of targeting July 2018 peak surrounding 0.7485. Alternatively, the pair’s declines below the previous year’s high of 0.7296 will highlight August 19 peak near 0.7275 as support.

Event Risk Data Today

AU – August Melbourne Institute Inflation Gauge

AU – July Private Sector Credit

AU – Q2 Company Profits

CH – August Manufacturing and Services PMI’s

US – August Dallas Fed Manufacturing Activity Index

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