Australian Dollar, AUD / USD, Asia-Pacific, Covid, Sentiment – talk points
- Australian dollar faces a deteriorating picture as local locks expand
- The Asia-Pacific markets remained in line with the prevailing trends in the Pacific economy
- AUD / USD faces a difficult technical picture after breaking the September altitude
Monday’s Asia-Pacific outlook
After the Pacific and Pacific markets, it has been open for a week after the shaking after Australia tightened lock-in measures in Sydney, a country-populated city over the weekend. The capital of New South Wales (NSW) has seen various restrictions since Friday, including the closure of insignificant retail stores as policymakers scramble to curb a new wave of infection caused by the highly prevalent Delta variant. The risk-sensitive Australian dollar has been beating in recent weeks as traders’ optimism about Australia’s economic recovery has worsened.
Japan is also facing a recovery. The Tokyo Olympics start on July 23, and close contact measures have already been put to the test as incoming athletes are positive for the virus. Like Australia, Japan has struggled to vaccinate its population, with many worried that Olympic enthusiasts from around the world could cause a population outbreak. Last week, the Bank of Japan (BoJ) lowered its gross domestic product (GDP) growth forecast from 4.0 percent this year to 3.8 percent. For his part Japanese yen has benefited from asylum flows over the last few weeks.
In energy markets, OPEC + reached an agreement that will end the recent stalemate due to production cuts and allow more oil to reach the world market. Saudi Arabia and the United Arab Emirates (UAE) compromised the revision of the baseline used to calculate output quotas. According to the deal, 400,000 barrels a day will grow in August. The United Arab Emirates will also receive the bumps in its sought-after production quota, but only next spring. Despite promising more oil markets, the renewed transaction is likely to reduce uncertainty about the collective strength of the energy cartel, which could mean that prices will rise again in the near future.
The prevailing risk trends are likely to drive the market trend this week, with low risk of high-impact events in the economic calendar. The European Central Bank (ECB) will publish its July interest rate decision later this week, with central bank observers waiting for its dovish position to continue. In Australia, the minutes of the last RBA meeting see cable crossings, as well as June retail sales and July PMIs.
The recent depreciation of the Australian dollar against most major exchange rates is likely to continue, especially against the euro US dollar, which, like the yen, sees support from asylum-seeking offers. However, the pace may slow down, as the decline over several weeks has already reflected the pricing of prevailing headwinds. Locking measures may also begin to bear fruit this week. If the daily number of cases starts to fall, it could provide a lifeline for the Aussie dollar.
AUD / USD technical outlook:
The Australian dollar broke last week’s Greenback higher than its September high, opening the door to further losses. Prices could be the basis for a resilient sector from the second half of 2020 onwards. Below the break, the focus would be on the 200-week Simple Moving Average (SMA), currently 0.7232. On the positive side, the reversal of the September swing height (0.7413) could give the bulls time to reassemble before a 20-day SMA attack that fails.
AUD / USD daily chart
The chart has been created TradingView
AUSTRALIAN DOLL TRADE RESOURCES
– Written by DailyFX.com analyst Thomas Westwater
Use the comments section or below to contact Thomas @FxWestwaterTwitter