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Resilience of industrial commodities and RBA reluctance to highlight new policy options plus underlying USD softness suggest a retest of tricky 0.7240/45 area for the aussie, per Westpac.

Key quotes

“Risk appetite has held firm through many weeks of lousy US Covid-19 data which only seem to reaffirm expectations of yet more Fed loosening, keeping equity portfolio weightings elevated. This should remain the case in the week ahead.” 

“The domestic mood continues to cool, with Australia’s whole eastern seaboard rattled by Victoria’s lockdown judging by the Aug consumer sentiment survey. It is yet to have much impact on national employment, with July showing a firmer than expected 115k jump in jobs.” 

“RBA Gov Lowe should be pressed on the faltering Q3 growth story but last week’s SoMP stuck to an upbeat 2021 outlook so no hints of policy loosening are likely. Along with iron ore >$120/t, AUD/USD should find buyers on dips to 0.7100/20 and have another go at breaking 0.7245.”