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Australian Dollar consolidates below 0.7200 ahead of RBA rate decision Tuesday

AUD - Australian Dollar

The Australian Dollar traded within a 50-pip range on Friday and with a risk-off end to the week the AUD/USD closed at 0.7160 vs the US Dollar. During the Asian session the pair initially pulled back touching an intraday low of 0.7131 following a drop in Australia’s Retail Sales numbers and reports of President Trump testing positive for COVID-19. Australia's consumer spending, as represented by Retail Sales, fell 4% vs an expected contraction of 4.2%, this follows a rise of 3.2% in July. The decline in consumer spending validates the Reserve Bank of Australia's easing of monetary policy. The central bank is now expected to cut rates to a fresh record low of 0.10% in November.

Looking ahead today, mostly low tier data out across the globe apart from US ISM Non-Manufacturing PMI with expectations to come in at 56.0 compared to 56.9 in the prior reading. Later in the week we will see the RBA rate decision and trade balance. The AUD/USD opens this morning at 0.7160, with no local scheduled releases moves will be again driven by offshore news and events. We can expect to see initial support at 0.7100 and 0.7050 on the downside. Resistance sits at 0.7200 followed by 0.7230.

Key Movers

The US Dollar Index which measures the strength of the Greenback against a basket of six major currencies was slightly up on Friday with September’s Nonfarm Payrolls reported adding 661k jobs to the economy vs. the 850k forecasted. The unemployment rate eased from to 7.9% from 8.4%. While millions more remain unemployed, September’s activity means that about 12 million jobs have been recovered since the mid-March economic shutdown that saw about 22 million layoffs.

Over in Europe, the EUR/USD closed lower at 1.1713 being one of the worst performers of the G10 currencies and the GBP/USD saw a brief rally after the news that UK Prime Minister Boris Johnson and EU’s President Ursula Gertrud Von Der Leyen are set to hold high level talks on Saturday in a bid to break the deadlock.

Expected Ranges

AUD/USD: 0.7110 - 0.7230 ▲

AUD/EUR: 0.6080 - 0.6140 ▲

GBP/AUD: 1.7850 - 1.8250 ▼

AUD/NZD: 1.0720 - 1.0840 ▼

AUD/CAD: 0.9460 - 0.9580 ▼