AUD/USD Price Forecast – Australian Dollar Continues to Show Weakness

The Australian dollar has broken down a bit during the trading session on Tuesday, to break down towards the 0.70 level. If we can break down below the 0.70 level, the market is likely to go looking towards the 200 day EMA. Breaking down below there allows the market to go down to the 0.68 handle. That of course is a very significant round figure and could kick off a larger move to the downside. Ultimately, a lot of this is going to come down to a lack of stimulus in the United States but we have also recently seen the Reserve Bank of Australia suggest that interest rate cuts are in fact coming, so that will weigh upon the Australian dollar as well.

AUD/USD Video 21.10.20

Ultimately, the market is likely to see a lot of selling on rallies, unless of course we were to somehow break above the 0.73 level. If we break above there, then it is likely that the overall uptrend should continue to go higher, perhaps reaching towards the 0.75 level. However, that is not my default position right now, so at this point it is likely that we will continue to see downward pressure. I do not know that it necessarily means that we are going to break down significantly, but it seems very likely that we are going to be negative in general. Ultimately, this is a market that will continue to be noisy and of course you have to keep in mind that the risk appetite is going to be a moving target. That being said, the more volatility that we get in other assets, the less likely this pair is to go higher.

For a look at all of today’s economic events, check out our economic calendar.

AUD/USD and NZD/USD Fundamental Daily Forecast – Aussie Hits Three-Week Low on QE Expectations

The Australian and New Zealand Dollars are trading sharply lower on Tuesday, putting them in a position to change their respective trends to down on the daily chart for the first time in nearly two-weeks.

Both currencies are being pressured by increasing expectations of monetary easing with the Australian central bank likely to take action at next month’s meeting and the New Zealand central bank likely to make their move early next year.

At 08:15 GMT, the AUD/USD is trading .7047, down 0.0022 or -0.32% and the NZD/USD is at .6575, down 0.0033 or -0.50%.

US Dollar Supported as Stimulus Deal Hopes Fade

Also weighing on the Aussie and the Kiwi was as stronger U.S. Dollar, which rose as fading hopes for a U.S. coronavirus aid package dealt a blow to risky assets worldwide.

While traders remain hopeful talks between U.S. House Speaker Pelosi and Treasury Secretary Mnuchin will result in a deal before the November 3 presidential election, any agreement will have to pass the Republican-controlled Senate where opposition to a bigger stimulus bill remains stubborn.

RBA Minutes Weigh on Aussie as QE Looms Large

The Reserve Bank of Australia (RBA) discussed the possibility of further monetary easing at its October board meeting, including cutting the cash rate towards zero and buying longer-dated government bonds, minutes of its most recent meeting showed on Tuesday.

RBA board members noted larger balance sheet expansions by other central banks had led to lower sovereign yields in most other rich nations, minutes of the October 6 meeting showed.

Board members also discussed implications for the exchange rate, providing the clearest sign yet the RBA will likely soon cut rates further and expand its massive bond buying campaign, to lower both borrowing costs and the local dollar.

Short-Term Forecast

The RBA has held its cash rate at a record low 0.25% since can emergency 50 basis points (bps) cut in mid-March. However, economists widely predict the RBA will trim the rate at its November 3 policy meeting by 15 bps to 0.1%. This move, coupled with the buying of bonds further out the yield curve should be enough to keep the pressure on the Aussie Dollar.

Buying long-dated bonds is one way that central bank policymakers would reduce funding costs.

For a look at all of today’s economic events, check out our economic calendar.

AUD/USD Daily Forecast – Australian Dollar Remains Under Pressure

AUD/USD Video 20.10.20.

U.S. Dollar Continues To Gain Ground Against Australian Dollar

AUD/USD remains under pressure as the U.S. dollar is gaining some ground against a broad basket of currencies.

The U.S. Dollar Index is currently trying to get back above the 20 EMA at 93.55. If this attempt is successful, the U.S. Dollar Index will gain additional upside momentum and head towards the next resistance level at the 50 EMA at 93.75. This scenario will be bearish for AUD/USD.

Today, AUD/USD traders will focus on the economic data from U.S. Building Permits are projected to increase by 1.8% month-over-month in September while Housing Starts are expected to grow by 2.8%.

In addition to economic news, the market will pay attention to the U.S. coronavirus aid package negotiations. At this point, it looks like Republicans and Democrats will not be able to reach any deal before the November election. However, a last-minute deal is also possible.

Technical Analysis

aud usd october 20 2020

AUD/USD has managed to settle below 0.7075 and gained additional downside momentum. However, it received support at 0.7030 and is currently trading in the range between the support at 0.7030 and the resistance at 0.7075.

If AUD/USD manages to settle below the support level at 0.7030, it will continue its downside move and head towards September lows at 0.7005. A move below the support at 0.7005 will open the way to the test of the next support level at 0.6975.

On the upside, the nearest resistance level for AUD/USD is located at the previous support level at 0.7075. AUD/USD needs to settle above this level to have a chance to develop upside momentum.

If AUD/USD moves above the resistance at 0.7075, it will gain additional upside momentum and head towards the next resistance at 0.7100.

A successful test of the resistance at 0.7100 will open the way to the next resistance at 0.7130. The 20 EMA is located in the nearby, so this resistance level is set to be a significant obstacle on the way up for AUD/USD.

If AUD/USD manages to settle above the resistance at 0.7130, it will move towards the next resistance level at 0.7150.

For a look at all of today’s economic events, check out our economic calendar.

A Quiet Economic Calendar Leaves U.S Politics, COVID-19, and Brexit in Focus

Earlier in the Day:

It’s was a relatively quiet start to the day on the economic calendar this morning. The Kiwi Dollar and Aussie Dollar were in action early on, with the PBoC also in the spotlight.

Away from the economic calendar, the markets also responded to the lack of progress on Capitol Hill.

For the Kiwi Dollar

In the 3rd quarter, the NZIER Business Confidence

According to the NZIER Quarterly Survey of Business Opinion,

  • A net 40% of firms expect business conditions to deteriorate in the 3rd quarter, compared with 63% in the previous quarter.
  • The building sector was the most confident, with a net 7% of firms expecting an improvement in the economy near-term.
  • Other sectors were more cautious. While manufacturers were less pessimistic, the service sector was the most pessimistic. A net 49% of services firms expect a worsening in general economic conditions in the coming months.
  • Uncertainty continues to plague the services sector after the adverse effects of lockdown and border restrictions.

The Kiwi Dollar moved from $0.66047 to $0.66027 upon release of the figures. At the time of writing, the Kiwi Dollar was down by 0.30% to $0.6586.

For the Aussie Dollar

The RBA monetary policy meeting minutes drew interest early this morning.

Salient points from the minutes included:

  • Members observed that the global economy was recovering but that most economies were still some way off pre-pandemic output levels.
  • The continuation of the recovery was dependent upon the containment of the virus.
  • China’s economic recovery was the most advanced, while globally, inflation remained very low and below central bank targets.

Domestically,

  • While Australia saw its largest economic contraction since the 1930s, members noted that the decline in output had been smaller than expected.
  • Labour market conditions had improved, with the unemployment rate likely to peak at a lower rate than previously expected.
  • The RBA expects both unemployment and underemployment to remain high for an extended period of time.
  • Members considered that the economy would need fiscal and monetary support for some time.
  • Members also noted that the effects of monetary policy easing had been impaired as a result of restrictions on activity in parts of the economy.
  • As the economy opens up, however, members considered it reasonable to expect further monetary policy easing to gain more traction.
  • The Board also considered the nature of the forward guidance regarding the cash rate. Given the higher level of uncertainty about inflation dynamics, the Board agreed to place more weight on actual, not forecast, inflation for its decision-making.
  • Members also indicated that they would like to see more than just progress towards full employment before considering an increase in the cash rate.

The Aussie Dollar moved from $0.70559 to $0.70582 upon release of the minutes. At the time of writing, the Aussie Dollar was down by 0.44% to $0.7043.

Out of China

The markets are expecting that the PBoC will leave Loan Prime Rates unchanged this morning. Currently, the 1-year LPR sits at 3.85%, with the 5-year at 4.65%.

Elsewhere

At the time of writing, the Japanese Yen was down by 0.10% ¥105.54 against the U.S Dollar.

The Day Ahead:

For the EUR

It’s a quiet day ahead on the economic calendar. Wholesale inflation figures for September are due out of Germany.

We don’t expect too much influence on the EUR, however, with COVID-19 numbers and any Brexit chatter in focus.

At the time of writing, the EUR was up by 0.02% to $1.1771.

For the Pound

It’s a particularly quiet day ahead on the economic calendar. There are no material stats due out to provide the Pound with direction.

The lack of stats will leave any further chatter on Brexit and updates on COVID-19 in focus.

While Downing Street announced an end to negotiations, the markets are expecting talks to resume. Boris Johnson left the door open for further talks, though it remains to be seen whether the EU will compromise…

At the time of writing, the Pound was flat at $1.2948.

Across the Pond

It’s a relatively quiet day ahead for the U.S Dollar.

September building permits and housing starts are due out later this afternoon.

Barring particularly dire numbers, we would expect the markets to brush aside the numbers.

The focus will be on the U.S Presidential Election polls, the Senate polls, and chatter from Capitol Hill.

Expect updates on COVID-19 to also influence on the day.

At the time of writing, the Dollar Spot Index was down by 0.02% to 93.404.

For the Loonie

It’s a particularly quiet day ahead. There are no key stats due out of Canada to provide the Loonie with direction.

The lack of stats will leave the Loonie in the hands of COVID-19 and U.S politics on the day. A continued rise in new COVID-19 cases will continue to test support for the Loonie.

At the time of writing, the Loonie was up by 0.02% to C$1.3190 against the U.S Dollar.

For a look at all of today’s economic events, check out our economic calendar.

Dollar Comes Back to the Bearish Territory

Nasdaq is still below dynamic and horizontal resistance

SP500 is on a good way to break crucial levels and go higher

DAX sharply bounces from the 12960 points

Dollar Index ignores the inverse head and shoulders and creates a flag. Situation here is bearish

EURUSD are flirting with important dynamic resistance

GBPUSD are one step from breaking 1,3 – the most important level in the past few weeks

AUDUSD with a small bullish correction but the main sentiment is very negative

EURAUD makes another attempt to escape from the long-term rectangle

EURCHF breaks crucial support and later tests it as a resistance. Pretty standard price action move

Gold tries to go higher but the upper line of the pennant looks well defended

AUD/USD Price Forecast – Australian Dollar Continues Sideways Chop

The Australian dollar has rallied a bit during the trading session on Monday to break above the 0.71 handle. That being said, there is still a lot of resistance above, and it could continue to cause some issues. Furthermore, the 50 day EMA is sitting above as well, and a certain amount of attention will be paid to that indicator as per usual. Ultimately, this is a market that has recently broken an uptrend line, and now we are going to pay attention to the Aussie going forward as far as any potential weakness.

AUD/USD Video 20.10.20

Further exacerbating the situation has been the fact that the Reserve Bank of Australia has recently hinted very strongly that there were interest rate cuts coming down the road. If that is going to be the case, then it should work against the value of the Aussie in general. Underneath, there is significant interest and support right around the 0.70 level, as well as the 200 day EMA racing towards that figure. Ultimately, if we were to break through all of that then it would almost certainly bring in a significant break down in this pair, perhaps sending it down to the 0.68 level and beyond.

Looking at this chart, I believe that we are probably going to see a lot of back and forth type of trading, at least in the short term as we try to figure out where to go next. Keep in mind that this is also a very risk sensitive currency pair, so depending on what is going on in the world, there may or may not be a drive towards the US dollar.

For a look at all of today’s economic events, check out our economic calendar.

AUD/USD Daily Forecast – Test Of Resistance At 0.7100

AUD/USD Video 19.10.20.

Australian Dollar Gains Ground Against U.S. Dollar At The Beginning Of The Week

AUD/USD is currently trying to settle above the nearest resistance level at 0.7100 while the U.S. dollar is mostly flat against a broad basket of currencies.

According to a recent Reuters poll, a majority of economists expect that Australia’s central bank will cut its interest rate from 0.25% to 0.1% in order to support the economy. However, it remains to be seen whether lower interest rates can put additional pressure on the Australian dollar in the current market environment.

Today, China reported that its GDP increased by 4.9% year-over-year in the third quarter compared to analysts’ estimate of 5.2%. At the same time, Retail Sales increased by 3.3% while the analyst consensus called for Growth of 1.8%. Industrial Production was also strong, growing by 6.9%.

Despite tensions which have emerged in recent years, the well-being of China’s economy is very important for the Australian economy. While China’s GDP report was somewhat disappointing, the strength of Retail Sales and Industrial Production provided some support to the Australian dollar.

In the U.S., traders will continue to follow the coronavirus aid package story. With just a few weeks left before the November election, Republicans and Democrats continue their negotiations.

The market believes that U.S. lawmakers will ultimately manage to reach consensus on the new deal but chances of any deal being negotiated before the election are slim.

Technical Analysis

aud usd october 19 2020

AUD/USD gained some upside momentum and is testing the resistance at 0.7100. If this test is successful, AUD/USD will move towards the next resistance level at 0.7130.

A move above this resistance will open the way to the test of the resistance at the 20 EMA at 0.7150. In case AUD/USD manages to settle above the 20 EMA, it will gain upside momentum and head towards the resistance at the 50 EMA at 0.7165.

On the support side, the nearest support level for AUD/USD is located at 0.7075. If AUD/USD declines below this support level, it will gain downside momentum and move towards the next support at 0.7030.

A move below the support at 0.7030 will open the way to the test of September lows just above 0.7000.

For a look at all of today’s economic events, check out our economic calendar.

AUD/USD and NZD/USD Fundamental Weekly Forecast – Aussie, Kiwi Face Rate Cut Pressure

The Australian and New Zealand Dollars closed lower last week with both currencies pressured by potentially bearish actions by their respective central banks. Lower demand for higher-yielding assets and a stronger U.S. Dollar also weighed on the Aussie and the Kiwi.

The greenback was primarily supported by safe-haven demand after U.S. policymakers strongly suggested a much anticipated fiscal stimulus deal would not likely be agreed upon before the U.S. presidential elections on November 3.

Last week, the AUD/USD settled at .7077, down 0.0164 or -2.26% and the NZD/USD finished at .6605, down 0.0067 or -1.01%.

Australian Dollar

The Australian Dollar weakened last week after a top Reserve Bank of Australia (RBA) official said monetary easing would become more effective as the economy loosens its coronavirus restrictions, an indication another cut to the official cash rate was likely.

RBA Governor Philip Lowe also said the board was studying the benefits that might come from buying longer-dated government bonds as part of its monetary stimulus package to boost jobs and growth.

“When the pandemic was at its worst and there were severe restrictions on activity we judged that there was little to be gained from further monetary easing,” Lowe said in a speech in Sydney.

The solutions to the problems the country faced lay elsewhere,” Lowe added referring to fiscal policy, which he said, has provided “welcome support” to the economy.

“As the economy opens up, though, it is reasonable to expect that further monetary easing would get more traction that was the case earlier.”

Lowe emphasized that creating jobs was the RBA’s “main focus”, with data on Thursday showing the unemployment rate had ticked up to 6.9% in September.

The implications of larger balance-sheet expansion by other central banks were another consideration as the RBA works at potential policy options, Lowe added.

“These are three of the complex issues we have been considering at our recent Board meetings,” Lowe said. “The Board will continue to review these and other issues at our upcoming meetings.

Weekly Forecast

Lowe’s speech prompted economists at Commonwealth Bank of America to revise their call to now predict a cut to the cash rate next month and additional bond purchases to lower yields on 5-10 year government bonds. They previously saw 0.25% as the lower bound of the current easing cyclWith the futures markets trending toward a rate cut and bond purchases by the RBA, prices are likely to feel pressure until they hit a value zone that is attractive to buyers. This is not likely until after the November 3 RBA meeting since there is always the possibility of a surprise in its monetary policy announcements.

Meanwhile, gains could be capped in the NZD/USD because of safe-haven demand for the greenback, and worries that the Reserve Bank of New Zealand is comfortable with taking its benchmark interest rate into negative territory in early 2021.

For a look at all of today’s economic events, check out our economic calendar.

Riskier Assets Find Support, with China Stats, COVID-19, and U.S Politics in Focus

Earlier in the Day:

It’s was a particularly busy start to the day on the economic calendar this morning. The Japanese Yen was in action early on, with economic data from China also in focus. Away from the economic calendar, U.S politics and COVID-19 were also in focus.

Positive chatter from Capitol Hill and hopes of a COVID-19 vaccine supported riskier assets early on.

Nancy Pelosi raised hope of a pre-Election Stimulus Bill over the weekend, while also setting a deadline for talks.

At the end of last week, U.S Pharma Phizer talked of having a COVID-19 vaccine ready before the end of the year.

For the Japanese Yen

Japan’s trade surplus widened from ¥248.6bn to ¥675.0bn in September. Economists had forecast a widening to ¥989.8bn.

According to figures released by the  Ministry of Finance,

  • Exports fell by 4.9% when compared with September 2019.
    • Exports to China jumped by 14.0%, while down by 2.0% to Asia.
    • Exports to the U.S rose by just 0.7%, while exports to Western Europe fell by 6.4%.
  • Imports tumbled by 17.2% when compared with September 2019.
    • Imports from China slid by 11.9% while falling by 12.6% from Asia.
    • From the U.S, imports fell by 9.9%, with imports from Western Europe sliding by 14.4%.

The Japanese Yen moved from ¥105.426 to ¥105.443 upon release of the figures. At the time of writing, the Japanese Yen was down by 0.01% ¥105.41 against the U.S Dollar.

Out of China

3rd quarter GDP, fixed asset investment, industrial production, retail sales, and unemployment figures were in focus this morning.

In the 3rd quarter, China’s economy grew by 2.7%, quarter-on-quarter, following 11.5% growth in the 2nd quarter. Year-on-year, the economy expanded by 4.9%, following 3.2% growth in the 2nd quarter. Economists had forecasted growth of 3.2% and 5.2% respectively.

Industrial production increased by 6.9%, year-on-year, in September, following a 5.6% rise in August. Economists had forecast a 5.8% increase.

Retail sales increased by 3.3%, following a 0.5% increase in August. Economists had forecast a 1.8% rise.

The unemployment rate declined from 5.6% to 5.4% in September, which was better than a forecasted decline to 5.5%.

The Aussie Dollar moved from $0.71031 to $0.70961 upon release of the figures. At the time of writing, the Aussie Dollar was up by 0.27% to $0.7100.

Elsewhere

At the time of writing, the Kiwi Dollar was up by 0.30% to $0.6622.

The Day Ahead:

For the EUR

It’s a particularly quiet day ahead on the economic calendar. There are no material stats due out of the Eurozone to provide the EUR with direction.

A lack of stats leaves the EUR in the hands of COVID-19 and any further chatter on Brexit.

With lockdown measures being introduced in Europe, any further steps to contain the virus will test EUR support.

At the time of writing, the EUR was down by 0.05% to $1.1712.

For the Pound

It’s also a quiet day ahead on the economic calendar. There are no material stats due out to provide the Pound with direction.

A lack of stats will leave the markets to react to any Brexit chatter and COVID-19 news.

Further COVID-19 restrictions are expected on Monday, which would be Pound negative.

At the time of writing, the Pound was up by 0.10% to $1.2928.

Across the Pond

It’s a quiet day ahead for the U.S Dollar.

With no material stats due out of the U.S, the focus will be on Capitol Hill and the U.S elections.

The markets are looking for a clean sweep, which will bring the Senate elections into focus. As Biden leads Trump in the Presidential Election polls, the Democrats will need to stay ahead in the senate polls to support riskier assets.

On Capitol Hill, any hint of progress towards a COVID-19 stimulus Bill would also support riskier assets on the day.

At the time of writing, the Dollar Spot Index was up by 0.02% to 93.697.

For the Loonie

It’s a relatively quiet day ahead. Key stats due out of Canada include August wholesale sales figures.

We don’t expect too much influence on the Loonie, however. COVID-19 news updates and market sentiment towards the economic outlook and demand for crude will remain the key drivers.

At the time of writing, the Loonie was up by 0.09% to C$1.3177 against the U.S Dollar.

For a look at all of today’s economic events, check out our economic calendar.

AUD/USD and NZD/USD Fundamental Daily Forecast – Rate Cut Chatter, Lower Risk Appetite Key Bearish Catalysts

The Australian and New Zealand Dollars finished mixed on Friday with the Aussie edging lower and the Kiwi inching higher. Both markets posted inside moves which suggest investor indecision and impending volatility.

Australian Dollar traders appeared to be taking a breather after a steep sell-off the previous session. That move was fueled by worries over a potential rate cut by the Reserve Bank of Australia (RBA) or the announcement of aggressive bond buying at its early November policy meeting.

New Zealand Dollar traders were likely squaring positions ahead of the week-end elections although the latest polls didn’t seem to be indicating concerns over possible surprises. Like the Aussie traders, Kiwi traders are primarily focused on the direction of interest rates with the Reserve Bank of New Zealand (RBNZ) floating around the idea of negative interest rates for early 2021.

On Friday, the AUD/USD settled at .7077, down 0.0018 or -0.28% and the NZD/USD finished at .6605, up 0.0008 or +0.12%.

No Follow-Through to Downside after Aussie Hits One-Week Low

Although the AUD/USD finished lower on Friday, there was no follow-through to the downside following the previous session’s steep sell-off. That move was fueled after the head of the central bank hinted of a possible rate cut or bond purchases.

Governor Philip Lowe in a speech in Sydney said the RBA is assessing whether buying longer-dated bonds would help the economy and considering an interest rate cut. This marks a major change in policy because the RBA currently intervenes to keep the three-year yield at 0.25% but doesn’t control yields further out the curve.

Risk Off Tone, Stimulus Uncertainty, Virus Concerns Support Dollar, Weigh on Aussie, Kiwi

The U.S. Dollar edged higher against the Australian and New Zealand Dollars on Friday on increased caution over a global surge in coronavirus cases and fading prospects for a U.S. stimulus package before the November 3 election.

The Aussie and Kiwi were headed for another steep drop on Friday, but an unexpectedly strong 1.9% rise in retail sales last month suggested the economy was carrying more momentum into the fourth quarter than anticipated, defying fears that the expiration of enhanced unemployment benefits in the summer would harm the economy. This news helped lift some of the pressure off the U.S. Dollar.

Short-Term Outlook

With Aussie traders adjusting their long positions ahead of the widely expected rate cut from 0.25% to 0.10% at the November meeting, and Kiwi investors still getting used to the idea of negative rates, at a minimum, we’re looking at gains in both currencies being capped over the near-term.

If there is pressure on the AUD/USD and NZD/USD then it’s going to come from the stronger U.S. Dollar. The greenback’s strength will be fueled by a weaker stock market or other signs of lower demand for riskier or higher yielding assets.

For a look at all of today’s economic events, check out our economic calendar.

The Week Ahead – U.S Politics, COVID-19, Brexit, and Private Sector PMIs in Focus

On the Macro

It’s a busy week ahead on the economic calendar, with 57 stats in focus in the week ending 23rd October. In the week prior, 56 stats had been in focus.

For the Dollar:

It’s a relatively quiet week ahead on the economic data front.

On Tuesday, Wednesday, and Thursday, housing sector figures for September are in focus.

With mortgage rates hovering close to historic lows, the numbers are unlikely to have a material impact on the Dollar.

On Thursday, however, U.S jobless claims figures will influence ahead of private sector PMIs on Friday.

October’s prelim services, manufacturing, and composite PMIs are due out at the end of the week.

Expect the Services PMI to be the key driver. The markets will be looking for a pickup in service sector activity…

Away from the economic calendar, we are just over 2-weeks away from the U.S Presidential Election. Wednesday’s final live televised Presidential debate will garner plenty of attention as will chatter from Capitol Hill. We can also expect increased interest in the Senate Election polls.

The Dollar Spot Index ended the week up by 0.67% to 93.682.

For the EUR:

It’s also a relatively busy week ahead on the economic data front.

On Tuesday, German wholesale inflation figures are due out ahead of a busier 2nd half of the week.

On Thursday, Germany is back in focus, with November consumer climate figures due out.

Prelim October private sector PMIs from France, Germany, and the Eurozone will be the key drivers on Friday, however.

We can expect plenty of sensitivity to the numbers. A new spike in new COVID-19 cases in France and other parts of the EU may have impacted activity at the start of the quarter.

Away from the economic calendar, Brexit and COVID-19 will need monitoring throughout the week.

The EUR/USD ended the week down by 0.91% to $1.1718.

For the Pound:

It’s a busy week ahead on the economic calendar.

The markets will have to wait until Wednesday, however, for the first set of numbers.

Inflation figures for September are due out ahead of CBI industrial trend orders on Thursday.

We would expect the Pound to be sensitive to the inflation figures ahead of a busy end to the week.

On Friday, retail sales figures for September and prelim October private sector PMIs will provide direction.

With the BoE open to negative rates, dire numbers will test support for the Pound.

Of greater influence in the week, however, will be Brexit and COVID-19 news.

The GBP/USD ended the week down by 0.93% to $1.2915.

For the Loonie:

It’s a relatively busy week ahead on the economic calendar.

At the start of the week, wholesale sales figures for August are in focus on Monday.

We don’t expect too much influence from the numbers, however.

On Wednesday, September inflation and August retail sales figures will provide direction.

From elsewhere, expect GDP numbers from China and prelim private sector PMIs from the Eurozone and the U.S to also influence.

Away from the economic calendar, risk appetite will likely be dictated by COVID-19 and the U.S Presidential Election polls. There’s also the final presidential debate to consider on Wednesday.

The Loonie ended the week down by 0.52% to C$1.3189 against the U.S Dollar.

Out of Asia

For the Aussie Dollar:

It’s a particularly quiet week ahead on the economic calendar.

There are no material stats due out of Australia to provide the Aussie with direction.

The lack of stats will leave the Aussie Dollar firmly in the hands of market risk sentiment in the week.

Expect China’s GDP numbers and prelim PMIs from the Eurozone and the U.S to influence

On the monetary policy front, the RBA meeting minutes at the start of the week will garner interest. There has been the talk of an RBA move next month, the minutes could reveal what is on the cards…

The Aussie Dollar ended the week down by 2.20% to $0.7081.

For the Kiwi Dollar:

It’s also a relatively busy week ahead on the economic calendar.

In the 1st half of the week, 3rd quarter business confidence figures are due out. A pickup in confidence would provide support to the Kiwi ahead of a busy Friday.

Trade data for May and 3rd quarter inflation figures will influence at the end of the week.

While the stats will provide direction, however, economic data from China and COVID-19 will likely be the key drivers.

The Kiwi Dollar ended the week down by 0.96% to $0.6602.

For the Japanese Yen:

It is a relatively quiet week on the economic calendar.

Trade data for September will draw interest at the start of the week ahead of inflation at the end of the week.

We don’t expect the numbers to have too much influence on the Yen, however.

The key driver for the Japanese Yen, however, will be COVID-19 news and U.S politics.

The Japanese Yen ended the week up by 0.21% to ¥105.40 against the U.S Dollar.

Out of China

It’s a busy week ahead on the economic data front.

3rd quarter GDP numbers due out on Monday will be the key driver for the Yuan and market risk sentiment.

September’s industrial production, retail sales, and unemployment figures will also influence.

Barring particularly dire numbers, the fixed asset investment numbers should have a muted impact.

On the monetary policy front, the PBoC is in action on Tuesday. The markets are expecting the PBoC to leave loan prime rates unchanged. Any unexpected rate cut could spook the markets…

The Chinese Yuan ended the week down by 0.04% to CNY6.6976 against the U.S Dollar.

Geo-Politics

UK Politics:

On Friday, Boris Johnson announced that Brexit negotiations were over. Downing Street added the EU chief negotiator Barnier does not need to return to London in the week ahead.

Following the EU’s attempts to leave the ball in Britain’s court, with Fisheries a key issue, it now rests with the EU to compromise. Johnson has been clear that it would not leave fishing access unchanged, despite Macron’s attempts to strong-arm Britain into yielding.

For French fishermen, it would ultimately mean no access to UK fisheries should Britain leave without a deal…

Also at the start of the week, the British Prime Minister is due to announce more containment measures. With the number of new COVID-19 cases continuing to rise, further restrictions would be Pound negative.

U.S Politics

After last week’s individual town hall sessions, the final live televised debate will take place on Wednesday.

It will be a chance for Trump to narrow the gap ahead of the 3rd November Election.

If past performance is any indicator of future performance, however, it could just give Biden a greater edge.

As the markets begin to write-off a Trump victory, the focus will likely shift to the Senate Elections.

A blue wave is expected that would support further stimulus in the New Year.

The Weekly Wrap – Brexit, COVID-19, and U.S Politics Drive the Majors

The Stats

It was a busier week on the economic calendar, in the week ending 16th October.

A total of 56 stats were monitored, following 43 stats from the week prior.

Of the 56 stats, 24 came in ahead of forecasts, with 21 economic indicators came up short of forecasts. 11 stats were in line with forecasts in the week.

Looking at the numbers, 20 of the stats also reflected an upward trend from previous figures. Of the remaining 36 stats, 27 reflected a deterioration from previous.

For the Greenback, it was back into the green after 2 consecutive weeks in the red. The Dollar Spot Index rose by 0.67% to 93.682. In the week ending 9th October, the Dollar Spot Index had fallen by 0.87% to 93.057.

Market risk appetite waned in the week. There were a number of factors driving demand for the Dollar. A lack of progress towards a U.S stimulus bill and a spike in COVID-19 cases were front and center in the week.

Disappointing economic data and Brexit woes also supported the demand for the safety of the Dollar.

Out of the U.S

It was a relatively busy week on the economic data front.

Inflation figures drew interest early in the week. In the 2nd half of the week, however, jobless claims and retail sales figures were the key drivers. Prelim October consumer sentiment figures were also in focus late on Friday.

In the week ending 9th October, initial jobless claims stood at 898k, which was up from 845k from the week prior. The numbers reinforced the view that the labor market recovery had stalled.

A combination of dire labor market conditions, rising new COVID-19 cases, and a lack of further stimulus was a bad combination.

At the end of the week, retail sales impressed, however. In September, retail sales rose by 1.9%, with core retail sales rising by 1.5%. Economists had forecasted increases of 0.5% and 0.7% respectively.

Aligned with the retail sales figures was a further pickup in consumer sentiment. The Michigan Consumer Sentiment Index rose from 80.4 to 81.2 in October, according to prelim figures. The Expectations Index increased from 75.6 to 78.8.

The only negative on the day was an unexpected 0.6% fall in industrial production.

In the equity markets, the NASDAQ rose by 0.79%, with the Dow and S&P500 gaining 0.07% and 0.19% respectively.

Out of the UK

It was a relatively busy week on the economic data front.

Key stats included August unemployment rate and employment change and September claimant count figures.

While claimant counts came in lower than expected, employment fell by more than expected over the 3-months to August.

A 153k fall in employment led to an increase in the unemployment rate from 4.1% to 4.5%.

While the stats provided direction, it was ultimately Brexit and COVID-19 that sank the Pound in the week.

A continued rise in new COVID-19 cases and a new round of containment measures were Pound negative.

More significantly, however, was a lack of progress towards a Brexit agreement, with the EU pushing for more talks next week.

On Friday, Boris Johnson announced that it was time to prepare for a no-trade deal Brexit unless the EU changed its stance. Downing Street also stated that there was no point in EU negotiator Michel Barnier returning to London in the week ahead.

In the week, the Pound fell by 0.93% to $1.2915. In the week prior, the Pound had risen by 0.78% to $1.3036.

The FTSE100 ended the week down by 1.61%, partially reversing a 1.94% gain from the previous week.

Out of the Eurozone

It was a relatively busy week on the economic data front.

Early in the week, key stats included ZEW Economic Sentiment figures for the Eurozone and Germany.

The indicators flashed red for October. Germany’s Economic Sentiment Indicator fell from 77.4 to 56.1, with the Eurozone’s falling from 73.9 to 52.3. A lack of progress on Brexit and jitters over the U.S Presidential Election weighed in October.

Mid-week, industrial production figures for the Eurozone came up short of expectations, rising by just 0.7%. In July, production had jumped by 5.0%.

In the 2nd half of the week, Eurozone trade data and finalized inflation figures for September were in focus.

Inflation figures reaffirmed market concern over deflationary pressures. Trade data also failed to impress, with the Eurozone’s trade surplus narrowing from €27.9bn to €14.7bn in August.

While the stats provided direction, a marked increase in new COVID-19 cases weighed on the EUR in the week. France and other member states were forced to reintroduce containment measures amidst the 2nd wave.

For the week, the EUR fell by 0.91% to $1.1718. In the week prior, the EUR had risen by 0.94% to $1.1826.

For the European major indexes, it was a bearish week. The CAC40 and EuroStoxx600 fell by 0.22% and by 0.77% respectively, with the DAX30 declining by 1.09%.

For the Loonie

It was a quiet week on the economic data front.

Key stats included August’s foreign security purchases and manufacturing sales figures.

Neither set of numbers had an impact, however, as the fresh spike in new COVID-19 cases weighed on market risk sentiment.

The threat of a reintroduction of lockdown measures pegged back crude oil prices in the week.

In the week ending 16th October, the Loonie fell by 0.52% to end the week at C$1.3189. In the week prior, the Loonie had risen by 0.87%.

Elsewhere

It was a bearish week for the Aussie Dollar and the Kiwi Dollar.

In the week ending 16th October, the Aussie Dollar slid by 2.20% to $0.7081. The Kiwi Dollar ended the week down by a more modest 0.96% to $0.6602.

For the Aussie Dollar

It was a relatively quiet week on the economic calendar.

Key stats consumer confidence and employment figures.

It was a mixed bag for the Aussie Dollar. While consumer confidence continued to improve, employment figures were somewhat disappointing.

The unemployment rate rose from 6.8% to 6.9%, driven by a 29.5k fall in employment.

For the Aussie Dollar, it was ultimately market sentiment towards monetary policy and risk aversion that did the damage. There is the talk of an RBA next month…

For the Kiwi Dollar

It was a relatively quiet week on the economic calendar.

Key stats included electronic card retail sales figures and business PMI numbers.

The stats were Kiwi Dollar positive, with retail sales up by 5.4% and the PMI rising from 50.7 to 54.0.

While positive, however, market risk aversion pegged the Kiwi Dollar back in the week.

For the Japanese Yen

It was also a relatively quiet week on the economic calendar.

August’s core machinery orders and finalized industrial production figures were in focus.

The stats were skewed to the negative in the week. Core machinery orders rose by just 0.2%, following a 6.3% jump in July. Industrial production was revised down from 1.7% to 1.0%.

Ultimately, however, it was market risk sentiment that delivered the support for the Yen.

The Japanese Yen rose by 0.21% to ¥105.4 against the U.S Dollar. In the week prior, the Yen had fallen by 0.31%.

Out of China

It was a relatively busy week on the economic data front following last week’s holiday.

Key stats included September’s trade data and inflation figures, which were skewed to the negative.

China’s U.S Dollar trade surplus narrowed from $58.93bn to $37.00bn, driven by a 13.2% jump in imports. Exports rose by a more modest 9.9%.

Inflationary pressures also softened at the end of the quarter. China’s annual rate of inflation softened from 2.4% to 1.7% in September. Wholesale deflationary pressures picked up marginally. The producer price index fell by 2.1%, following a 2.0% decline in August.

In the week ending 16th October, the Chinese Yuan slipped by 0.04% to CNY6.6976. In the week prior, the Yuan had risen by 1.42%.

The CSI300 rose by 2.36%, with the Hang Seng gaining 1.11%.

AUD/USD Weekly Price Forecast – Australian Dollar Has Rough Week

The Australian dollar has broken down significantly during the week, to slice through the 0.71 handle. If you been following me here at FX Empire for some time, you know that the area between 0.70 and 0.71 is what I consider to be a “zone of influence.” This is not necessarily a support or resistance area, more like a zone. There is a lot of fighting back and forth in this general vicinity.

AUD/USD Video 19.10.20

Because of this, the market is likely to see a break down below the 0.70 level as something rather significant. The fact that we broke through an uptrend line recently and then came back to test it yet again. This is an area that will continue to offer resistance as well, so ultimately I think this is a market that probably go sideways as we have so many different things out there competing for attention and driving the possible direction of risk appetite and risk assets such as the Aussie dollar.

The US dollar has been weakening for some time, but when you look at the chart you can see that we had gotten far too ahead of ourselves. A pullback makes quite a bit of sense, but as the 0.70 level is extraordinarily important, and as a result I think that a lot of short-term tension will be paid to that level. As things stand right now, I suspect that the 0.70 level offer support while the 0.72 level offers resistance and I assume that the default situation is that we are consolidating. If we break down, then a drop to the 0.68 level could be very possible.

For a look at all of today’s economic events, check out our economic calendar.

AUD/USD Price Forecast – Aussie Dollar Sitting On Top of Support Zone

The Australian dollar has dipped slightly during the trading session on Friday as we head into the weekend. We have seen a significant turn in the overall attitude of risk appetite out there, and of course the expectations of stimulus coming out of the United States. Because of this, the market has changed its trajectory, and recently we had retested the previous uptrend line that was so supportive. At this point, it becomes a question of whether or not the Australian dollar can continue to go higher, or is it doomed to fail?

AUD/USD Video 19.10.20

At this point, the market it is crucial to pay attention to the 0.70 level because not only is it a large, round, psychologically significant figure, but it is also the area where the 200 day EMA is racing towards. When we get down to that area on a pullback, the market will need to put serious work into breaking down, but if we do in fact break down from there it is likely that the Australian dollar will drop another couple of handles. The velocity will of course pick up as well, as the trapdoor will have opened. However, if we were to turn around and rally from here, I think we still need to look at the 0.73 level as major resistance. That is not only a large, round, psychologically significant figure but it is also where the uptrend line that we previously paid so much attention will coincide.

Keep in mind that the market is very sensitive to risk appetite, and quite frankly there are a minefield of problems out there just waiting to jump in and push the markets around.

For a look at all of today’s economic events, check out our economic calendar.

AUD/USD Daily Forecast – Range-Bound Between 0.7075 And 0.7100

AUD/USD Video 16.10.20.

Australian Dollar Is Flat Against U.S. Dollar Ahead Of The Weekend

AUD/USD is mostly flat after yesterday’s sell-off as the U.S. dollar is little changed against a broad basket of currencies.

The U.S. Dollar Index continues to test the nearest resistance level at the 50 EMA at 93.75. It has already made several attempts to settle above this level but faced strong resistance.

In case the U.S. Dollar Index manages to settle above the 50 EMA, it will gain significant momentum and continue its upside move which will be bearish for AUD/USD.

Yesterday, U.S. Initial Jobless Claims report indicated that the job market recovery has stalled as Initial Jobless Claims increased from 845,000 to 898,000. It is not clear whether U.S. Republicans and Democrats will be able to reach consensus on the new coronavirus aid package before the November election so job market reports may get worse in the next few weeks.

Today, AUD/USD traders will focus on the new economic reports from the U.S. Retail Sales are expected to increase by 0.7% in September on a month-over-month basis. Industrial Production is projected to grow by 0.5% month-over-month while Manufacturing Production is expected to increase by 0.7%.

Technical Analysis

aud usd october 16 2020

AUD/USD did not manage to settle below the support level at 0.7075 and remains in the range between 0.7075 and the nearest resistance at 0.7100.

If AUD/USD gets below the support at 0.7075, it will gain downside momentum and head towards the next material support level at 0.7030, although it may also get some support near the recent lows at 0.7055.

In case AUD/USD moves below the support at 0.7030, it will decline towards September lows at 0.7005.

On the upside, AUD/USD needs to get above the nearest resistance level at 0.7100 to have a chance to develop upside momentum. If AUD/USD gets above this resistance level, it will move towards the next resistance at 0.7130.

A move above the resistance at 0.7130 will open the way to the test of the next resistance at 0.7150. The 20 EMA is located at 0.7160 so the resistance area at 0.7150 – 0.7160 is set to be a strong obstacle on the way up for AUD/USD.

For a look at all of today’s economic events, check out our economic calendar.

Brexit, U.S Stimulus Talks, and Economic Data Put the Pound and the Dollar in Focus

Earlier in the Day:

It’s was a relatively quiet start to the day on the economic calendar this morning. The Kiwi Dollar was in action early on.

Away from the economic calendar, updates on Brexit and U.S stimulus talks were also in focus as the markets responded to disappointing economic data from the U.S.

For the Kiwi Dollar

In September, the Business PMI rose from 50.70 to 54.0. In August, the PMI had fallen from 58.8 to 50.7.

The Kiwi Dollar moved from $0.66015 to $0.65993 upon release of the figures. At the time of writing, the Kiwi Dollar was up by 0.02% to $0.6599.

Elsewhere

At the time of writing, the Japanese Yen was up by 0.08% ¥105.37 against the U.S Dollar, while the Aussie Dollar was down by 0.08% to $0.7088.

The Day Ahead:

For the EUR

It’s a relatively quiet day ahead on the economic calendar. Key stats include finalized September inflation figures for Italy and the Eurozone and August trade figures for the Eurozone.

Barring a marked downward revision to Eurozone inflation figures, however, the stats should have a muted impact on the EUR.

Away from the economic calendar, COVID-19 news and Brexit will remain key drivers on the day.

At the time of writing, the EUR was down by 0.02% to $1.1706.

For the Pound

It’s a quiet day ahead on the economic calendar. There are no material stats due out to provide the Pound with direction.

A lack of stats will leave the markets to react further to the EU Summit. Covid-19 containment measures, announced in the week, will also test Pound support on the day.

Following a disappointing outcome to the EU Summit, where no progress was made, Boris Johnson is due to make a statement today. The deadline has now passed and no framework for an agreement is in place. Will the British PM pull the plug?

At the time of writing, the Pound was down by 0.05% to $1.2902.

Across the Pond

It’s another busy day ahead for the U.S Dollar.

Key stats include September retail sales and industrial production figures along with October consumer sentiment figures.

Expect the retail sales and consumer sentiment figures to be the key drivers on the day.

Away from the economic calendar, U.S politics, and updates from Capitol Hill will also influence on the day.

The Dollar Spot Index rose by 0.51% to 93.856 on Thursday.

For the Loonie

It’s a relatively quiet day ahead. Key stats due out of Canada include August manufacturing sales and foreign securities purchases.

Barring particularly dire numbers, however, we would expect the stats to have limited influence on the Loonie.

Expect updates on new COVID-19 cases and market risk sentiment to be the key drivers on the day.

At the time of writing, the Loonie was down by 0.03% to C$1.3225 against the U.S Dollar.

For a look at all of today’s economic events, check out our economic calendar.

AUD/USD Price Forecast – Australian Dollar Breaks Through Support

The Australian dollar has broken down from the 50 day EMA during trading on Thursday, slicing through the 0.71 handle. Ultimately, the market is looking towards the 0.70 level underneath, an area that of course is a large, round, psychologically significant figure and will attract a lot of attention. Ultimately though, I think the 0.70 level will be crucial for a longer-term move, and therefore we should be looking at it through the prism of a potential major breakdown.

AUD/USD Video 16.10.20

What is truly interesting is that we also have the 200 day EMA racing towards that level, and therefore I think that the dynamic support will come into play as well. If we break down below the 200 day EMA then the absolute “bottom will fall out” of this market typically and could send the Australian dollar down to the 0.65 handle. Quite frankly, this is a market that is going to be based more on China than anything else, and although China is strengthening it appears that most of China’s customers are not. Furthermore, the RBA suggested that interest-rate cuts were coming in Australia due to employment issues. With that being the case, makes quite a bit of sense that the highflying Aussie dollar may find itself in serious trouble.

Keep an eye on the 0.70 level, because it is an area that will attract a lot of attention in general, and a lot of big funds will have to look at this through the prism of being a major figure and a lot of stop losses and options barriers will probably be found in this area as well. As stimulus looks to be less and less likely out of the United States, at least in the short term, we are starting to see the greenback strengthen as well.

For a look at all of today’s economic events, check out our economic calendar.

Trading Currencies: Not All One Way (But Close)

It’s interesting how strong ‘risk-on’ trading has been over the past 3 to 4 weeks. The US dollar basket since the first Presidential debate has almost been in a downward linear trend that suggests the market is actually backing a change of administration at the White House.

Today (Oct. 15) was originally scheduled for the second US presidential debate in Miami, but it was cancelled after President Donald Trump said he refused to participate. Final round will be held at Belmont University in Nashville on Oct. 22.

DXY since September 28:

However, there are a few issues outside of the US election that are creeping into the trades.

AUD/USD – Challenging relationship with China

AUD/USD had been pretty steady around $0.7210 for a little while. However, news that China might be looking to freeze imports of coal from Australia broke the trend and knocked the pair to $0.7175.

Australian Treasurer Josh Frydenberg said in a conference this week that the linkages between China and Australia in terms of coal import are vitally important to the country, yet the relationship is mutually beneficial as well.

Australia’s economy has performed rather well through the COVID crisis and is likely to remain one of the better performing economies in the coming 12 months.

EUR/USD – Second wave is making a heavy comeback

EUR/USD is also coming under pressure as the second wave in Europe builds to levels not seen since the March peak with Italy’s active cases rising to 5,901 from 4,619, France now has 21,329 active cases while the Netherlands announced a partial lockdown by closing bars, restaurants and cafes from Wednesday as its active case start to impact hospitalisations. All this has seen EUR/USD down to $1.1743, a 65-pip fall, in 24 hours and is showing further weakness.

GBP/USD – Records highest daily rise of COVID cases since March

GBP/USD is suffering from the same issue as the UK’s second wave sees a new tiered lockdown structure. Currently there are 17,234 active cases, however it’s the fact that cases are now growing at a rate not seen since March that has GBP/USD on edge (~5000 cases a day). Hospitalisations stand at 3,905 but that number is sure to increase. GBP/USD fell 1% to $1.2935 and will likely fall further if numbers continue to spiral and/or lockdowns get stronger.

Vaccine news could drive the market

Given the fact that COVID is still impacting the market prices as the recent surge of cases has become increasingly worrying, headlines that evolve around the vaccine progress are likely to move the market prices dramatically. Just earlier this week when Johnson and Johnson paused its coronavirus vaccine trials after a participant experienced an unexplained illness, EUR/USD slipped below 1.18 and US stocks edged lower. Volatility will continue to be high in the coming weeks. Stay alert on news and manage your positions with risk management tools.

This article is prepared by Lucia Han from Mitrade and is for reference only. We do not represent that the material provided here is accurate, current or complete. The article content neither takes into account your personal investment objects nor your financial situation, and therefore it should not be relied upon as such. You should seek for your own advice.

AUD/USD Daily Forecast – Australian Dollar Is Under Serious Pressure

AUD/USD Video 15.10.20.

U.S. Dollar Gains Ground Against Australian Dollar

AUD/USD is testing the nearest support level at 0.7100 as the U.S. dollar is gaining ground against a broad basket of currencies.

The U.S. Dollar Index is currently trying to settle above the resistance at 93.50. If this attempt is successful, the U.S. dollar will gain additional upside momentum which will be bearish for AUD/USD.

In the U.S., Republicans and Democrats continue to negotiate a new coronavirus aid package but it looks like no consensus will be reached before the November election.

In Europe, countries continue to introduce additional virus containment measures to deal with the second wave of the virus. Yesterday, France imposed a curfew on its biggest cities.

Problems on the U.S. stimulus front and worries about the second wave of coronavirus in Europe put pressure on demand for riskier assets like the Australian dollar.

Today, Australia reported that Unemployment Rate increased from 6.8% in August to 6.9% in September. Analysts expected that Unemployment Rate would increase to 7.1%.

Meanwhile, Australia’s Employment Change report indicated that employment declined by 29,500 in September. This report was also better than analysts’ expectations.

Today, traders will also have a chance to take a look at new U.S. employment reports. Analysts expect that Initial Jobless Claims and Continuing Jobless Claims reports will highlight some minor progress on the job front.

Technical Analysis

aud usd october 15 2020

AUD/USD gained strong downside momentum and is testing the support level at 0.7100. In case AUD/USD manages to settle below this level, it will head towards the next support at 0.7075.

A move below 0.7075 will open the way to the test of the next support level at 0.7030. There are no material levels between 0.7030 and 0.7075 so this move may be fast.

On the upside, the nearest resistance for AUD/USD is located at 0.7130. If AUD/USD settles above this level, it will head towards the next resistance level at 0.7150.

If AUD/USD gets above the resistance at 0.7150, it will gain additional upside momentum and get to the test of the significant resistance at the 50 EMA at 0.7175.

For a look at all of today’s economic events, check out our economic calendar.

AUD/USD and NZD/USD Fundamental Daily Forecast – Aussie Tumbles as RBA Chief Hints at Rate Cut or Bond Buying

The Australian Dollar is trading lower on Thursday, moving further away from last week’s top at .7243 and closer to support around .7125 to .7055. The New Zealand Dollar was also moving lower but was a little steadier than the Aussie.

At 07:27 GMT, the AUD/USD is trading .7101, down 0.0061 or -0.85% and the NZD/USD is at .6630, down 0.0028 or -0.41%.

The weakness in the Australian Dollar is being fueled by a sharp drop in Aussie Government bond yields in response to comments from Reserve Bank of Australia (RBA) Governor Philip Lowe. The New Zealand Dollar fell mostly in sympathy with the Aussie and on expectations of negative interest rates in early 2021.

Aussie Sinks on Easing Hints

The Australian Dollar dropped to a one-week low after the central bank chief hinted of a possible rate cut or bond buying. The news drove down bond yields which made the Australian Dollar a less-attractive asset.

Australian Government bonds jumped 8 ticks overnight to their highest level since early April after RBA Governor Philip Lowe noted that 10-year yields were among the highest in the developed world and it was worth considering whether buying the debt in the market would bring those down.

While the central bank has been a regular purchaser of short-term debt, it has shunned the long end. Lowe also said further policy easing would have more impact now that coronavirus restrictions were being eased across much of the country.

Australian Jobs Report Signals Need for More Stimulus

The need for further stimulus was underlined by data showing 29,500 jobs were lost in October while the unemployment rate rose a tick to 6.9%.

Lowe earlier emphasized that creating jobs was the number one priority of both monetary and fiscal policy, and the central bank stood ready to do all it could to help.

Also weighing on the Aussie were more reports that Chinese importers were deferring purchases of Australian coal amid trade tensions between the two countries.

Short-Term Outlook

The AUD/USD is likely to continue to feel downside pressure ahead of next month’s RBA meeting where policymakers are likely to trim interest rates from a record low 0.25% to 0.1%.

Money markets are priced for a November rate cut and bond markets think the RBA could start buying further along the curve, with 10-year bond futures up 8.5 ticks to their highest since April.

“It is also likely the RBA will announce their intention to purchase more bonds in the 5-10 year part of the curve,” said CBA economist Kristina Clifton.

“Lower bond yields will have the first round effect of reducing interest costs for the government as they continue to provide a massive amount of fiscal support to the economy.”

For a look at all of today’s economic events, check out our economic calendar.