$ Down On Weak Risk Tone, Potential For Deeper Retracement

Aussie was under pressure on Friday due to weak risk appetite driven by soft European PMIs, and it underperformed the G10, except NOK. AUDUSD fell below 0.6700 and is currently around 0.6680. The USD index finished 0.5% higher.

• Last week AUDUSD broke through the 20-day and 50-day EMAs and breaching the latter at 0.6704 suggests a potential deeper retracement. The next support is 0.6627, a Fibonacci retracement point, and a break of this would strengthen bearish conditions. Clearing resistance at 0.6806 would ease the bearish threat.
• AUDJPY is down 0.7% to 95.98 after reaching 95.26, the lowest since June 15. AUDNZD is 0.6% lower at 1.0868 close to today’s low of 1.0864, weakest since early June. AUDEUR fell 0.6% to 0.6127 and AUDGBP -0.9% to 0.5251.
• Equity markets were weaker with both the S&P and Eurostoxx down 0.8%. VIX was at 13.4%. Oil prices finished off their intraday lows with WTI flat and have started the week +0.7% to $70.04/bbl. LME metal prices fell 2.3% on the week and iron ore is lower at $109.50/t.
• There are no data or events in Australia today. The highlights of the week will be Wednesday’s May CPI and Thursday’s May retail sales.