AUD range bound ahead of key Wage Growth indicator and labour market data

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AUD - Australian Dollar

The Australian dollar remained largely range bound through trade on Monday bouncing between supports at 0.6715 and resistance at 0.6735 as updates from China suggest the coronavirus remains relatively stable. While the number of new cases rose over the weekend, the death rate slowed, easing market fears and when combined with increased fiscal stimulus from Beijing prompted an upturn in risk driven support.

Attentions now turn to the February RBA monetary policy meeting minutes for direction through trade on Tuesday as the Quarterly Wage Price Index Wednesday and Employment data Thursday provide key markers guiding future RBA interest rate direction. Softness across wage prices and a correction in recent labour market strength will add increased pressure on policy makers to cut interest rates before the second half of 2020 and could act as the catalyst driving the AUD below key supports at 0.6680, while a surprise upturn should consolidate supports and prompt a drive toward 0.6750.

Key Movers

The Great British Pound edged lower through trade on Monday, giving up gains enjoyed in the wake of Boris Johnson’s cabinet re-shuffle and the appointment of Rishi Sunak as finance minister. Prime Minister Johnson has pushed for an uptick in fiscal spending and Sunak is expected to let the tap flow freely in a bid to stimulate domestic economic growth and ease the burden of the Brexit transition. Having touched highs at 1.3070 sterling slipped below 1.30 and opens this morning at 1.2998. With support in play on moves approaching recent lows at 1.2873 and resistance at 1.3070/1.31 attentions turn to CPI and Core CPI inflation data prints Wednesday and composite PMI data Friday as a key markers governing Bank of England Policy direction.

The Euro struggled to bounce off recent lows through trade on Monday as persistently lacklustre macroeconomic indicators continued to weigh on investor sentiment. With little data on hand to drive early week direction the combined unit failed to shrug off signs the German economy is beginning to falter as attentions turn to key data sets. German ZEW economic sentiment report Tuesday and key manufacturing and services data Friday govern short term direction and demand for carry trades. Having traded near 3 year lows the currency has lost over 2% throughout February and remains poised to extend the break.

Expected Ranges

AUD/USD: 0.6680 - 0.6750 ▼

AUD/EUR: 0.6080 - 0.6210 ▼

GBP/AUD: 1.9280 - 1.9430 ▼

AUD/NZD: 1.0380 - 1.0480 ▲

AUD/CAD: 0.8850 - 0.8920 ▼

Author

OzForex Research

OzForex Foreign Exchange

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