A$ Underperforms On Commodity Dip

The A$ was among the weakest performers within the G10 FX space at the end of last week. AUD/USD dipped briefly below 0.6900 post the Asia close on Friday, before recovering to 0.6940. Dips towards 0.6910 have been supported in early trade today and we currently track around 0.6940.

• Commodity weakness is front and centre for the AUD at the moment. Iron ore fell below $120, which is around fresh lows for the year. While copper slid 2.3% on Friday to the low $400/lb region, which is a fresh low for the year.
• Global demand fears appeared to be the main driver of sentiment, with oil prices also slumping. Brent and WTI futures are higher in early trade today though.
• The aggregate Bloomberg spot commodity price still shed close to 7.3% last week. This index is back to lows from mid-March
• There are no major data releases today. With RBA events kicking off tomorrow, including a speech by Governor Lowe and the minutes from the last policy meeting.
• From a technical standpoint, AUDUSD remains above 0.6851, the Jun 14 low. Short-term gains are considered corrective though and a bearish threat remains present. A resumption of weakness would signal scope for a test of key support and the bear trigger at 0.6829, the May 12 low. Clearance of this support would confirm a resumption of the downtrend and open 0.6805, the Jun 22 2020 low. On the upside, 0.7063, Jun 13 high is seen as an initial firm resistance.