Australian dollar aided by positive risk sentiment
Monday 26 October, 2020
Daily Currency UpdateThe Australian dollar posted a modest recovery last week against the Greenback, aided by positive risk sentiment, ending the week around 0.7130. Local data on Friday we saw the release of Australian preliminary October Commonwealth Bank Manufacturing PMI which came in at 54.2 from 55.4 in the previous month, while Services PMI improved to 53.8 from 50.8 in the month of August. There are no scheduled releases today in Australia. Looking ahead this week and on Wednesday we will see the release of Consumer Price Index (CPI) for the previous quarter. With market forecast 1.5% from -1.9% previously. On Thursday we will see the release of the NAB Quarterly Business Confidence and finally Producer Price Index (PPI) on Friday. From a technical perspective, the AUD/USD pair is currently trading at 0.7125. We continue to expect support to hold on moves approaching 0.7110 while now any upward push will likely meet resistance around 0.7170.
Key MoversThe Greenback weakened slightly against a basket of major currencies on Friday amid uncertainty over a new round of stimulus ahead of the upcoming U.S. elections, with the greenback set to record a weekly decline of around 1%. The market, pricing in a Biden victory, still expects a stimulus package by the end of the year. The US dollar is now likely to be stuck in a holding pattern in the near term, given the risk that the election could be contested. On the data front in United States on Friday we saw the release of Manufacturing PMI improved to 53.3 from 53.2, while the services PMI beat expectations by jumping to 56 from 54.6. On Monday the US will publish the Chicago Fed National Activity Index and New Home Sales both for the month of September along with the October Dallas Fed Manufacturing Business Index. Later in the week we will see the U.S. third-quarter gross domestic product data which is due on Thursday.
- AUD/USD: 0.7030 - 0.7230 ▲
- AUD/EUR: 0.5920 - 0.6090 ▲
- GBP/AUD: 1.8150 - 1.8350 ▼
- AUD/NZD: 1.0500 - 1.0700 ▼
- AUD/CAD: 0.9210 - 0.9450 ▲