Coronavirus Woes Expected To Weigh On AUD

A recovery in the greenback on Thursday saw AUD/USD lose ground, the pair dipped as low as 0.7410 before seeing a small bounce, last trading at0.7424.

• The local coronavirus situation will continue to be in focus; Melbourne has entered a five-day lockdown after Sydney extended restrictions earlier this week. CBA anticipates the lockdowns will likely weigh on AUD: "The spread of the virus from greater Sydney to Melbourne means around half of the nation's population and economy is in lockdown. The lockdowns can only weigh on Australia's economic expansion and keep AUD undervalued for longer. The Reserve Bank of Australia has started to taper its weekly asset purchases. The RBA's tapering may be slower and more drawn out if the lockdowns continue for longer than currently anticipated."
• From a technical perspective AUD/USD traded lower Thursday, signaling a potential resumption of the downtrend. Price recently found resistance at 0.7599, Jul 6 high and the outlook is bearish with sights on 0.7362, the bear channel base drawn off the Feb 25 high. The recent move lower maintains the price sequence of lower lows and lower highs and moving average studies remain in bear mode. Initial resistance is at 0.7503, the Jul 13 high.
• There are no economic releases on the docket today, but iron ore export numbers from Port Hedland are due. Iron ore has recovered its recent losses, in Singapore futures are around 2% off 2021 highs.