4th September 2020 - AUD Depressed to one-week low under 0.7300, Aussie Retail Sales, US NFP eyed

Good Morning,

Market Headlines

US equity indices reversed sharply, the S&P500 falling 3.5%, amid stretched valuations and technicals, all the big names were hit including Apple which was down 8% and Amazon which was 6.2% lower. US 2yr treasury yields fell from 0.14% to 0.12%, while the 10yr yield fell from 0.67% to 0.60%. Commodities, Brent crude oil futures fell 1.0% to $44.00, copper fell 1.3%, iron ore rose 2.0% to $130.75 – the highest level since January 2014, and gold fell 0.4%.


AUD/USD: 0.7265 – 0.7319

EUR/USD: 1.1789 – 1.1865

GBP/USD: 1.3244 – 1.3318

USD/JPY: 106.00 – 106.55

USD/CAD: 1.3074 – 1.3162

NZD/USD: 0.6695 – 0.6755

AUD/JPY: 77.03 – 77.75

AUD/NZD: 1.0826 – 1.0859

AUD Thoughts

- AUD/USD sellers attack lower end of the recent 0.7265-82 trading range after flashing three-day losing streak.

- US Dollar Index staged three-day run-up despite mixed data.

- Risk catalysts, Australia’s final version of July Retail Sales ahead of Non-Farm Payroll tonight

Markets may get intermediate clues from July month’s final reading of Retail Sales, expected 3.3% initially, as well as the key risk catalysts like the coronavirus (COVID-19) updates, US stimulus news and the US-China tensions. However, a lack of liquidity can be witnessed during the generally following pre-NFP trading lull.

Having slipped below an ascending trend line from July 31, the pair trades near the late-August top with the 21-day EMA level, around 0.7240, acting as immediate support. However, the buyers may remain hopeful unless the quote slips below an upward sloping support line from July 14, at 0.7210.

Event Risk Data Today

AU – July retail sales, market predict July retail sales growth will be confirmed at 3.3% in the final estimate, up from 2.7% in June. The AiG PSI increased 12.5ppts in July to a still-weak 44.0 as restrictions eased. The August read will likely tumble on the Melbourne lockdown.

NZ - Market forecast Q2 building work to drop sharply (-30%) as COVID-19 restrictions limit activity (prior: -5.7%).

US – August nonfarm payrolls, both the ISM employment indexes and ADP print point to downside risks for nonfarm payrolls in August (prior: 1763k, market f/c: 1350k,). Unemployment will remain elevated for some time; market forecast 10.0% and 9.8% in August (prior: 10.2%). And downward pressure will remain on average hourly earnings (prior: 0.2%, market f/c: 0.0%).