Expected To Be Rangebound Ahead Of RBA Speech

Spot AUD/USD finished higher on Wednesday, recovering from intraday lows at 0.7704 to touch highs of 0.7755. The pair last changes hands at 0.7747. AUD was dragged higher by NZD flows after strong employment figures while higher oil prices and firmer commodity complex were also supportive. Iron ore has slipped slightly in early trade after gaining throughout the session on Wednesday, touching the highest for a decade at 187.60 in Singapore. Chinese steelmakers continue to ramp up production despite government attempts to reign in run rates on an environmental basis.

• From a technical perspective AUD/USD Tuesday traded below first support at 0.7691, the Apr 22 low. This threatens the bullish price structure that had dominated after the recent break of a trendline resistance drawn off the Feb 25 high. A deeper pullback would open losses toward 0.7635 and the 0.7586 key near-term support. Resistance is unchanged at 0.7816/18 the 18 Apr 29 highs. A clear break of this hurdle would open 0.7849, the Mar 18 high.
• Looking ahead the domestic economic docket is empty until a speech by RBA Governor Debelle at 1000BST/1900AEST, CBA does not expect anything new to emanate from his comments: "RBA deputy governor Guy Debelle speaks about 'monetary policy during covid'. We expect his speech to be largely backward looking. We also expect him to be asked in the Q&A about possible changes to yield curve control and the next quantitative easing program. But we do not expect Debelle to pre‑empt a decision the RBA Board has said it will make at its July meeting."