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The AUD/USD pair peaked last week at 0.7288, its highest level since September, thanks to the broad greenback’s sell-off within the US presidential election context. However, mounting tensions between Canberra and Beijing could take their toll on the aussie though, technically, the risk remains skewed to the upside, FXStreet’s Chief Analyst Valeria Bednarik briefs.

Key quotes

“It seems that Joe Biden will become the next occupant of the White House. However, US President Donald Trump has sent to courts his allegations of large-scale fraud and theft. The drama is not over and won’t be for at least a few more days.”

“The Chinese government has announced the ban of several Australian commodities, such as coal, lobster, copper ore and copper concentrates, and market talks are suggesting it will also ban wheat. Beijing´s punitive restrictions came as Canberra joined an international inquiry into the origins of COVID-19 back in April.”

“On the pandemic, Victoria reported seven days in a row without new cases or deaths, and premier Daniel Andrews is expected to announce more easing of restrictions over the weekend. Authorities keep moving into reopenings at a cautious pace, which seems the best thing to do these days, considering what’s happening in the rest of the world. On the other hand, the US has reported record new cases above 100,000 per day for two consecutive days.”

“The AUD suffered a short-lived setback on Tuesday, following the Reserve Bank of Australia monetary policy decision. The central bank delivered, as expected, cutting rates to a record low of 0.1%. Furthermore, policymakers said they plan to buy AUD 100 B of 5y-10y bonds over the next 6 months. However, Governor Philip Lowe and company remained optimistic about economic progress in the near-term, adding that negative rates are extraordinarily unlikely.”

“Below 0.7200, the immediate support level, the pair could test the mentioned 0.7120 price zone, while further declines would expose the 0.7000 threshold. Gains beyond 0.7300 will open the doors to an advance towards the yearly high at 0.7411.”