AUD/USD drops toward 0.7000, suffers biggest weekly percentage decline since March

• AUD/USD extended its daily slide in the American session. 
• US Dollar Index is up nearly 2% for the week.
• AUD/USD is losing 3.75% since the start of the week.

The AUD/USD came under renewed bearish pressure during the American session and slumped to its lowest level in more than two months at 0.7007. As of writing, the pair was down 0.41% on the day at 0.7016. On a weekly basis, AUD/USD is losing 3.75% and looks to suffer its biggest percentage decline since early March.

The broad-based USD strength in the second half of the day caused AUD/USD to extend its slide. Following a modest downward correction on Thursday, the US Dollar Index (DXY) gained traction and rose to its highest level in 9 weeks at 94.74 before retreating slightly. At the moment, the DXY is at 94.68 rising 0.37% and 1.8% on a daily and weekly basis, respectively.

The only data from the US showed that Durable Goods Orders in August rose by 0.4% in August. Although this reading came in worse than the market expectation for an increase of 1.5%, underlying details of the report revealed that Durable Goods Orders excluding Defense rose by 0.7% and beat analysts’ estimate of 0.1%.

AUD/USD near-term outlook

Westpac analysts share their view for AUD/USD’s near-term outlook:

“Benchmark iron ore has dropped $15 from the 14 Sep high and gold has tumbled but coking coal and copper are holding up. Australia will continue printing trade surpluses but the USD and risk mood are key for the aussie near-term.” 

“It is hard to draw a line under AUD/USD in the current market mood, so we switch to down on the week, with scope for 0.6965 then the 0.6900 area, though there is no obvious support around there.”

Additional levels to watch for