5th August 2020 - AUD/USD defies the pullback from 0.7167 while picking up the bids from 0.7155.


Good Morning,

Market Headlines

US benchmarks were choppy on Tuesday but that did not prevent that Nasdaq Composite extending its all-time highs, with the US buoyed by stronger data and company earnings. However, there was still no resolution to the deadlock between congressional Democrats and Republicans on a fresh fiscal relief package for the US.

Currencies

AUD/USD: 0.7116 – 0.7167

EUR/USD: 1.1722 – 1.1806

GBP/USD: 1.2982 – 1.3108

USD/JPY: 105.65 – 106.19

USD/CAD: 1.3324 – 1.3422

NZD/USD: 0.6590 – 0.6625

AUD/JPY: 75.47 – 75.77

AUD/NZD: 1.0789 – 1.0829

AUD Thoughts

- AUD/USD defies the pullback from 0.7167 while picking up the bids from 0.7155.

- RBA stood fat with policymakers citing global outlook as “highly uncertain”.

- Aussie Retail Sales gained on MoM but lagged quarterly, Trade Balance softened.

- US dollar failed to cheer upbeat Factory Orders as policy deadlock over stimulus continues.

Markets now turn their attentions to Australia’s AiG Performance of Construction Index and Commonwealth Bank Services PMI ahead of watching over Aussie housing market data and China’s Caixin Services PMI. However, major attention will be given to the US stimulus package, COVID-19 updates and ISM Non-Manufacturing PMI for near-term direction. Although the US dollar has started trading lower, any surprise positive will be enough to pull the greenback well above the two-year lows and weigh on the AUD/USD.

Overall the pair is still in an uptrend. It is only wise to worry about the divergence if the red support level breaks to the downside. It would be hard to bet against the strength of this uptrend at the moment and if the psychological 0.72 area break it could be game on for the bulls.

Event Risk Data Today

CN – July Caixin PMI

Eurozone – July services PMI

US – July ADP employment

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