Outperforms As Greenback Recedes

AUD outperformance persisted throughout the Wednesday session, with prices narrowing the gap with $0.74 - a level not crossed since early August. Prices also traded north of the 50-DMA at $0.7382 for the first time since June. This kept the AUD at the top of the G10 currency table well into the close. In contrast, the USD Index ebbed to new weekly lows, showing back below 92.50 on a sizeable miss in ADP employment change data. AUD/USD rose as high as 0.7384 before slipping slightly into the close, last trades up 2 pips at 0.7368.

• From a technical perspective AUD/USD maintains a firmer tone and has cleared the 20-day EMA. Recent gains are still considered corrective though. The breach of 0.7290 on Aug 17 confirmed an extension of the bearish price sequence of lower lows and lower highs, reinforcing a downward cycle. Price has also cleared 0.7200 opening 0.7053 further out, a Fibonacci retracement. The next firm resistance is at 0.7385/89, the 50-day EMA and Aug 11 high. A break would be bullish.
• GDP data was better than expected yesterday, which underscored the RBA assertion that the country was in a much more stable position entering the current lockdown. Still, worries around the pandemic persist, cases in Victoria rose to a new record today, hitting 176 cases.
• Monthly trade balance and housing finance data headline the domestic docket on Thursday. CBA says: "We are forecasting a solid lift in exports thanks to another chunky rise in commodity prices in the month. However, we expect Australia's trade surpluses will ease from August, in part because China is focusing on cutting steel output in H2 21."