Australian Dollar retreats back under 73c against the US Dollar

AUD - Australian Dollar

With the AUD touching a two-year high (0.7413) mid-week on the back of the Federal Reserve adopting a new policy that will keep interest rates low for a long time, the AUD/USD lacked momentum on Friday and stuck within a tight range intraday (0.7251-0.7278). As trading continued offshore, better-than-expected jobs numbers out of the US painted a picture of improvement and continued recovery in the US economy creating demand for the greenback and pushing the AUD/USD to weekly lows of 0.7222 early in the North-American session.

Locally, we saw Australian Retail Sales rise 3.2% for the month of July slightly below expectations of 3.3%. All states and territories reported growth expect for Victoria which was down due to the lock-downs. In the week ahead, the macro-economic calendar is light for Australia, we will see updates on Australian business and consumer confidence but global mood is likely to be the key. Adopting a technical view point, the AUD opens at 0.7283, we see initial support at 0.7220 followed by 0.7130. On the topside, resistance has formed around 0.7340 followed by 0.7380

Key Movers

The USD Index which measures the strength of the Greenback against a basket of six major currencies was up 0.5% on Friday helped by a positive US jobs report for August. Data showed non-farm payrolls increased by 1.371 million jobs in August and the unemployment rate fell to 8.4% from 10.2% in July. Meanwhile, Gold fell a fourth straight day in a row on Friday, losing 2% on the week from an unexpected surge in the Greenback.

In Europe, Germany saw the release of Factory Orders which rose 2.8% in July, the numbers were below estimates however noting it was a third rise in a row. EUR/USD hit 1.2000 earlier in the week for the first time since 2018 and has been boosted mostly by a broadly weaker Greenback and improved sentiment towards the European Union’s 750 billion-euro pandemic rescue fund. Inflation in the eurozone also turned negative in August for the first since 2016. Markets will be anticipating this Thursdays ECB policy meeting as officials will have plenty to talk about.

Expected Ranges

AUD/USD: 0.7220 - 0.7380 ▲

AUD/EUR: 0.6100 - 0.6190 ▲

GBP/AUD: 1.8100 - 1.8300 ▼

AUD/NZD: 1.0800 - 1.0900 ▲

AUD/CAD: 0.9460 - 0.9580 ▲