4th August 2020 - AUD/USD: Off one-week low to regain 0.7100, eyes RBA


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Market Headlines

US equities maintained a positive sentiment overnight with the S&P500 up 0.7% to a fresh five-month high, and the NASDAQ100 to a record high. Commodities, Brent crude futures gained 0.9% to $43.95, copper gained 1.6%, and iron ore rose 5.2% to $116.35 (a 12-month high), while gold remained unchanged.

Currencies

AUD/USD: 0.7077 – 0.7129

EUR/USD: 1.1695 – 1.1785

GBP/USD: 1.3005 – 1.3113

USD/JPY: 105.58 – 106.47

USD/CAD: 1.3383 – 1.3451

NZD/USD: 0.6575 – 0.6635

AUD/JPY: 75.07 – 75.50

AUD/NZD: 1.0718 – 1.0784

AUD Thoughts

- AUD/USD seesaws around 0.7120-32 after recovering from 0.7075.

- US dollar recovery, worsening coronavirus conditions in Victoria favoured short-term sellers earlier.

- RBA widely anticipated repeating the status-quo amid pandemic, Aussie Retail Sales and Trade Balance to also entertain pair trader.

- US stimulus talks, second-tier data and virus updates will also be watched.

Looking ahead, markets will keep eyes on the RBA’s monetary policy decision and Statement of Monetary Policy (SoMP). While the policymakers are less likely to offer any surprises, the recent outbreak of the virus in Victoria might push them towards a dovish outlook, which in turn could extend the Australian dollar’s weakness.

Ahead of the RBA, Australia’s June month’s Retail Sales may confirm 2.4% preliminary forecast whereas Trade Balance can rise to 8,800M from 8,025M for the said month.

An ascending trend line from May 22, currently around 0.7075 precedes the 0.7065/60 support-zone, comprising June 10 high and July 24 low, to restrict the pair’s near-term downside. Alternatively, bulls have to dominate past-0.7200 to regain market confidence.

Event Risk Data Today

AU – June retail sales

AU – RBA meeting

CA – Markit manufacturing Survey

US – June durable goods and factory orders

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