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Collapse Of U.S. Stimulus Talks Knocks AUD/USD

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AUD/USD failed to hold onto gains registered in the wake of the RBA's in-line stand-pat MonPol decision on Tuesday and momentarily gave them away, before ebbing lower still into the London morning. Although the RBA saw the unemployment rate peaking at a lower level than expected, it said that policymakers continue to consider how additional monetary stimulus could support jobs. AUD/USD took another hit as U.S. President Trump tweeted that he presses pause on fiscal negotiations with the Democrats until after the presidential election. The topside was capped by the 50-DMA in Asia-Pac hours and the rate descended onto the round figure & Sep 30 low of $0.7100 after Trump's comments.

  • Elsewhere, Australian Treasurer Frydenberg delivered the Federal Budget, with deficit set to reach A$213.7bn in FY20/21. Fitch commented that the Budget signals a more proactive use of fiscal policy in stimulating economic recovery.
  • Today's round of morning interviews has centred around the Budget, with gov't members quizzed about the optimistic assumption of a Covid-19 vaccine being available in 2021. All in all, nothing much of note there.
  • AUD/USD trades +3 pips at $0.7105 after probing the water under $0.7100. A fall through Sep 29 low of $0.7070 would expose Sep 25 low of $0.7006. Conversely, a push through the 50-DMA/Oct 1 & 6 highs at $0.7206/09 would turn focus to Sep 22 high of $0.7235.
  • Australian weekly payroll data comes out today, with housing finance data coming up on Friday.

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