External Factors Still Driving The AUD
Last night saw the USD falling across the board, with the usual exception of the JPY, though on this occasion was warranted based on familiar drivers. Hopes of renewed talks between the US and China on trade prompted a bout of risk appetite and offloading of safe haven USDs, in turn sending the commodity and risk related currencies higher.
Having dipped into the 0.7000's, AUD/USD then rallied back through the mid 0.7100's, to take out some minor selling interest either side of 0.7150, and is now testing the first major bank of resistance seen from 0.7200. While the spot rate is holding off this area, for now, we see Gold and other base metals prices holding better levels this morning, so upside pressure is set to persist near term.
Adding to the buoyant mood was another strong Australian employment report, which saw the economy adding 44k jobs in Aug, though looking at the price action, there seems to have been relatively little reaction to this. Domestically, there are plenty of headwinds which will prompt traders to look through this data, for now, namely household debt and falling house prices, but as a backdrop, some of the excessive negativity on the AUD can be trimmed back.
For now, look for global themes to dictate trade here. Support ahead of 0.7000 was anticipated given this is a key psychological level, and there is plenty of reason to expected losses from here on out will be contained to some degree - especially with the USD overstretched as it is across the board.