Australian dollar analysis and talking points
- AUD / USD | RBA the main domestic focus
- RBA rate setters signal convenience over Current AUD level
AUD / USD | RBA the main domestic focus
A silent end of the week in the middle of the shortened week of vacation in the United States. That said, the Australian dollar continues to track risk sentiment upward, despite mounting concerns about a second wave of COVID cases. Looking ahead to next week, however, the key risk event for the Australian dollar is the RBA monetary policy meeting. While little is expected in terms of a change in the RBA’s monetary policy, attention will be paid to the rhetoric around the Australian dollar, given the considerable rise since the March lows.
|
Change in |
Long pants |
Shorts |
OI |
| Diary | -one% | 13% | 8% |
| Weekly | -14% | twenty-one% | 7% |
RBA rate setters Signal comfort overAUD
In light of recent comments, the RBA does not appear to be showing great concern over the rise in the Australian dollar, unlike its New Zealand counterpart. With this in mind, the reaction in the AUD will largely depend on the comment on the exchange rate, so a continuing signal of comfort from the current level in AUD could cause the currency to march back towards the 0.70 handle. . However, as RBA Harper alludes, gains at the Australian above 0.70 could be somewhat shallow.
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Australian Dollar Technical Outlook
On the downside, the previous resistance, now the support is located at 0.6494, which marks 100DMA. A break below will leave AUD / USD at risk of a further dip towards 0.6450, however, to confirm a short-term high at 0.6600, a close break below 0.6400 would be required. On the upside, a rebound would likely be limited to 0.6600 before key resistance in the form of 200DMA residing at 0.6660. Given mounting tensions between the United States and China, the Australian dollar appears to be vulnerable at current levels. The bias is to the downside, however the 0.6400 control is key to a further shake-up from recent longs.
|
Support for |
Resistance |
||
|
0.6900 |
– |
0.6980 |
Jun-23rd Tall |
|
0.6850 |
– |
0.7000 |
– |
|
0.6820 |
50% fiber |
0.7062 |
2020 high |
AUD / USD price chart: daily time frame
Source: IG Graphics
— Written by Justin McQueen, Market Analyst
Follow Justin on Twitter @JMcQueenFX
