Australian Cotton Industry Falls Prey To Canberra's Spat With Beijing

AUD/USD was battered by comments from RBA Gov Lowe coupled with broader risk-off flows Thursday. Lowe's dovish speech increased RBA easing bets, inspiring AUD sales across the board, while a mix of Sino-U.S. tensions, fiscal stalemate & above-forecast increase in jobless claims in the U.S., Brexit jitters and coronavirus resurgence across Europe dented riskier currencies. The rate punched through support from Oct 7 low and attacked its 100-DMA, showing at its worst levels since late Sep.

• AUD has come under some light pressure this morning, amid reports suggesting that Sino-Aussie trade tensions have spilled over into Australian cotton industry. The ABC reported that "mills in China are being told to stop buying Australian cotton", with sources noting that "the cotton industry could face tariffs as high as 40 per cent, a sanction that could make the trade with China unviable". Per AAP, Australia's cotton exports to China are worth A$800mn per annum.
• The first three flight from New Zealand, operating under the newly established trans-Tasman travel bubble, will touch down in Australia today. Travellers will still need to quarantine upon return to NZ.
• AUD/USD has shed 6 pips and deals at $0.7088. Sep 28 low of $0.7029 provides the initial support level and a break below there would turn focus to Sep 25 low of $0.7006. On the flip side, a clearance of Oct 15 high of $0.7170 would draw attention to trendline resistance at $0.7207.
• Next week's data docket features weekly payroll data (Tuesday), flash retail sales (Wednesday), NAB Business Confidence (Thursday) and flash CBA PMIs (Friday). RBA Asst Gov Kent will speak ahead of the release of RBA Oct MonPol meeting minutes on Tuesday, while RBA Dep Gov Debelle speaks on Thursday.