AUSTRALIAN DOLLAR FORECAST – AUD PRICE ACTION EYES SUBDUED VOLATILITY DESPITE EXTENDED VIRUS LOCKDOWNS; RBA MINUTES ON DECKThe AU
AUSTRALIAN DOLLAR FORECAST – AUD PRICE ACTION EYES SUBDUED VOLATILITY DESPITE EXTENDED VIRUS LOCKDOWNS; RBA MINUTES ON DECK
- The AUD doubtless stands to be strong-armed by broader market sentiment
- Australian Greenback might maintain marching larger if the absence of volatility is sustained
- RBA minutes, affect of coronavirus lockdown measures may undermine the Aussie
The Australian Greenback has notched an astounding rally towards its US Greenback peer since AUD/USD value motion bottomed in March amid peak coronavirus panic. Alongside bettering danger urge for food, in addition to a notable retracement decrease in foreign money volatility, Aussie bulls have steered the sentiment-linked AUD/USD broadly larger. Indicated by one-week AUD/USD implied volatility readings, volatility is anticipated to subside additional, which might assist maintain the Australian Greenback in demand barring no surprising bearish developments unfold.
| Change in | Longs | Shorts | OI |
| Every day | -8% | 1% | -3% |
| Weekly | 9% | 4% | 6% |
AUD/USD PRICE CHART: DAILY TIME FRAME (14 FEBRUARY TO 14 AUGUST 2020)
Chart created by @RichDvorakFX
That mentioned, the Australian Greenback has misplaced upward momentum extra lately. This seems to correspond with prolonged coronavirus lockdown measures put in force throughout main areas of Australia and follows an preliminary upbeat response to the RBA assembly. Melbourne, for instance, was positioned beneath a stage-four lockdown for six weeks whereas a stage-three lockdown was introduced for broader Victoria.
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The Australian economic system and AUD value motion doubtless stands to face headwinds in flip – notably seeing that there’s proof that the rebound in financial exercise has already confirmed indicators of stalling. To not point out, as detailed within the newest RBA assembly press assertion, the form of the financial restoration is “dependent upon containment of the virus.”
RBA MEETING MINUTES MIGHT UNDERSCORE PROLONGED NEED FOR ACCOMMODATIVE POLICY
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RBA assembly minutes are scheduled for launch this coming Tuesday, August 18 at 01:30 GMT. The RBA minutes may underscore how fiscal stimulus and accommodative financial coverage measures “can be required for a while given the outlook for the economic system and the labour market.” Contrasted towards the backdrop of a possible second wave and freshly-enforced lockdown measures, it’s attainable that the Australian economic system and employment state of affairs, along with AUD value motion, might weaken.
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Additionally price mentioning, the RBA outlined how the central financial institution deliberate to renew buying 3-year Australian Authorities Securities (AGS) after yields climbed above 25-basis factors and its yield curve management goal. That is the primary time the Reserve financial institution of Australia bought AGS in a number of weeks. Correspondingly, if the upcoming launch of RBA minutes delivers a deeper undertone hinting at a necessity for extra financial assist, there might be potential for Australian Greenback energy to sputter out.
Maintain Studying – Australian Greenback Forecast: AUD/USD, AUD/NZD Ranges to Watch
— Written by Wealthy Dvorak, Analyst for DailyFX.com
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