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AUD lower as global equities sold off

AUD - Australian Dollar

The AUD had a rough session yesterday, falling from 0.7320 to 0.7265 on the day as global equities fell sharply. There was no obvious reason for the fall in equities however the moves spilled over into currency markets as commodity currencies like the Aussie and the Kiwi were hit hard while safe haven currencies such as the Japanese Yen and Swiss Franc outperformed.

Looking ahead to today’s session, we have July retail sales due out this morning. Markets are pricing sales growth of 3.3% which would be an improvement from June’s 2.7% read however the outlook for August looks particularly bleak given the lockdowns in Victoria. Focus then shifts offshore to tonight’s US non-farm payrolls read where markets are looking for a 1350K increase and a lower unemployment rate of 9.8%.

On the technical front, an extension of the recent downtrend could see initial support tested at 0.7245 whilst on the upside, a reversal could see the pair push through the key 0.73 handle.

Key Movers

As we touched on above, the big falls in global equities have dominated headlines in financial markets overnight. The S&P500 fell 4% without any trigger whilst the Euro Stoxx 600 performed better, only falling 1.4%.

The moves did spill over into currency markets however the USD index was largely unchanged on the day whilst safe haven currencies outperformed. USD/JPY fell to 106.00 and the EUR returned to levels above 1.18 after a two day downtrend.

Commodities were mixed amidst the risk off mood. Despite 1% and 1.3% falls in oil and copper, Iron ore rose 2% to touch its highest level since January 2014.

Expected Ranges

AUD/USD: 0.7245 - 0.7330 ▼

AUD/EUR: 0.6100 - 0.6190 ▼

GBP/AUD: 1.8160– 1.8350 ▲

AUD/NZD: 1.0800 - 1.0900 ▲

AUD/CAD: 0.9430 - 0.9580 ▼