Only a renewed bout of USD weakness helped the aussie avoid a break of 0.7000 this week. The AUD/USD pair risks a move towards 0.6965 as there is plenty of risk of further equity turbulence on US political headlines, with extra weight from Reserve Bank of Australia’s firmly dovish tone, as per Westpac.
Key quotes
“Domestically, COVID-19 case trends remain encouraging, in stark contrast to Europe and the US. Loosening of restrictions by state remains cautious but the direction is positive, including in Victoria.”
“Improvement in domestic spending will not do much to reverse a likely rise in unemployment, keeping the RBA on track for a major policy loosening on November 3. There is quite a range of expectations but the RBA has made clear that a lower A$ would be a helpful by-product. This local headwind for the Aussie combines with a skittish mood in global equities, as agreement on US fiscal support remains elusive and the election draws closer, boosting volatility.”
“Look for rallies to fail into 0.7155/68 resistance, with 0.7000 to give way to 0.6965, which would be well received at the RBA.”
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