Can't Catch A Break

The risk off tone abated on Tuesday, but AUD/USD struggled to make up any lost ground. The pair fell as low as 0.7300 before recovering, finishing the session with a loss of 14 pips at 0.7330, last trading at 0.7332.

• From a technical perspective AUD/USD traded lower Monday and the near-term outlook remains bearish following the sell-off that prompted new multi-month lows and a breach of the channel base at 0.7360. The break of the channel base marks an important short-term technical break and opens 0.7304 next, the 1.236 projection of the Feb 25 - Apr 1 - May 10 price swing. On the upside, initial resistance is seen at 0.7443, Jul 16 high.
• Locally, the domestic COVID situation and associated potential delay to the RBA's yet-to-be implemented tapering will continue to garner most of the attention. South Australia imposed the strictest lockdown since the start of the pandemic yesterday, meaning half of Australia's population is in lockdown with Victoria and NSW also observing restrictions.
• Preliminary retail sales data, the Westpac leading index headline the local docket on Wednesday.