Helped By Recovery In Metals

The greenback finished the day lower which helped AUD recover through the session on Tuesday, AUD/USD last down 2 pips at 0.7349 after closing with gains of 17 pips yesterday. The move higher was also supported by a bounce in commodity prices, including iron ore.

• From a technical perspective AUD/USD remains in a range, but edged lower into the Friday close. The trend outlook is unchanged and bearish. This follows the recent breach of a channel base drawn from the Feb 25 high. Despite the fact that price has moved back inside the channel area, the move lower marks an important technical break, signalling potential for 0.7235 next, a 1.236 projection of the Feb 25 - Apr 1 - May 10 price swing. On the upside, initial resistance is at 0.7429, Jul 19 high.
• The local COVID-19 situation will be another focus today. Victoria recorded 20 cases in the past 24 hours, the state government is yet to confirm an extension of Melbourne's lockdown, which is due to end at 8:00pm Thursday.
• Domestically Westpac consumer confidence data is on the wires today. CBA says AUD still has headwinds: "the Australia‑US 10 year spread widened further and now sits at ‑15bp. The negative spread will remain a weight on AUD for some time in our view. Our fixed income analysts expect further decreases in the bond spread to 25bp. It would not be surprising to see a slump in today's August consumer confidence index in light of the extended lockdowns across Australia"