Risk-off mood continues as Aussie moves towards 0.6850

AUD - Australian Dollar

In the absence of any local data on Friday the Australian Dollar traded within a 55-pip range against the Greenback and struggled to make a decisive move in either direction. Having moved higher by 1.5 cents earlier on in the week touching 0.6960 the pair witnessed a sell-off as a resurgence in new coronavirus cases in the US threatened to halt the progress in reopening the US economy. With risk dominating the markets and investor nerves rising, riskier currencies like the Aussie and Kiwi are the first to go, having touched an intra-day high of 0.6895, the pair slipped lower and closed Friday’s session at 0.6861.

Looking at the calendar ahead, it is a pretty quiet week for macro news. Tuesday see’s RBA Deputy Governor Debelle speak may clarify the Bank’s position on AUD after Lowe’s comment this week. Thursday is Trade Balance and Friday sees Retail Sales which are expected to show some improvement. As we move into the last week of the Australian financial year, we would expect to continue to see the Aussie vulnerable with rising COVID-19 cases not only in the US, but parts of Europe and also locally in Australia.

Adopting a technical viewpoint, the Australian Dollar opened at 6860. We see initial support at 0.6810, followed by 0.6775. On the topside, the 70c continues to be a huge resistance barrier with 0.6960 a level to watch in the short-term.

Key Movers

The US Dollar Index which measures the strength of the Greenback against a basket of six major currencies was relatively unchanged on Friday. US Covid cases saw the largest daily rise in six-weeks whilst Florida and Arizona had their largest daily rise of infections. The state of Washington has paused its staged reopening amid concerns. US domestic data added to the downbeat tone, Personal Spending underwhelmed, rebounding by 8.2%, less than the 9.3% jump forecasted. This was still a sharp increase on April’s record -12.6% drop. Meanwhile, US Consumer Confidence also came in under expectations at 78.1 in June, missing forecasts of 79.2. Whilst this is only a slight difference it is seen to be an important one as confident consumers spend money which is essential for the US economy to recover quickly. On the flip side, a nervous consumer is unlikely to spend so freely and will hold back the economic rebound leading to a more drawn-out recovery.

The Cable is lower once again touching 4-weeks lows of 1.2314 on Friday driven by a rally of the US Dollar across the board. The GBP also lower against the EUR, getting close to critical resistance levels of 0.9100 and CHF dropped to its lowest levels since March at 1.1687

Expected Ranges

AUD/USD: 0.6810 - 0.6960 ▼

AUD/EUR: 0.6040 - 0.6180 ▼

GBP/AUD: 1.7780 - 1.8140 ▼

AUD/NZD: 1.0650 - 1.0720 ▲

AUD/CAD: 0.9350 - 0.9420 ▲