Drops From One-Month High

A rebound in the greenback after a six-day slide saw AUD/USD decline from a one-month high, the pair ran into support at 0.7760 but broke the level at the third time of asking and plunged to 0.7709 before bouncing slightly. Last trades at 0.7728.

• CBA is still constructive on the outlook for AUD citing commodity prices: "Nevertheless, iron ore prices remain elevated and have risen to the highest level in 9 years. Resilient Chinese iron ore demand is supporting Chinese steel margins and iron ore prices. Strong iron ore prices will eventually help AUD recover its losses in our view. However, we continue to expect China's commodity demand will ease later in 2021 once China's commodity‑intensive stimulus of 2020 finally fades."
• Iron ore could get a boost today after BHP reported shipments slightly below estimates at 66.0m tons compared to 67.1m tons expected. This follows reports from Vale and Rio Tinto where output and shipments were impacted, and at the same time China's steel production rose 19% Y/Y in March.
• From a technical perspective AUD/USD maintains a firmer tone following last week's break of 0.7677, Apr 7 high and this week's follow through. Recent gains have also resulted in a break of trendline resistance drawn off the Feb 25 high and note, price is back above the neckline of a recent head and shoulders reversal pattern. Furthermore, an ability to remain above the 50-dma strengthens a bullish case. Initial firm support is at 0.7706, Feb 14 and 19 low.
• The highlight on the domestic docket today is March preliminary retail sales consensus is for a rebound to 1% M/M from -0.8% in February. Datapoints indicate consumer confidence is positive but has come off recent highs, while localized lockdowns during the survey period could impact the figure.