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Price Action Emphasises AUD Vulnerability to Waning Risk

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  • While RBA Governor Bullock downplayed this week's financial market volatility, Monday’s price action emphasised the Aussie’s sensitivity to a turn in risk, with AUDJPY exhibiting a huge 5.75% range. Furthermore, price action across several AUD crosses highlight the vulnerability to a further deterioration for global market sentiment. Indeed, despite a marginally hawkish RBA overnight, some renewed pressure on major benchmarks has weighed on AUD in recent trade.
  • US ISM Services data offered a near entire reversal off the lows for AUDJPY on Monday, however, given the fragility of equities and the ongoing carry unwind, downside risks remain. Indeed, we have noted that both leveraged funds and asset managers still maintain a deep net short JPY position.
  • The psychological 90.00 mark and 0.8606 (2023 lows) will remain important chart points to consider for AUDJPY. From a short-term perspective, 92.15 is seen as support following the low put in on the WMR fix on Monday.
  • For AUDUSD, a bearish theme remains intact. Monday’s low print highlights a test of key support at 0.6463, the Apr 19 low. A clear break of this level would reinforce a bearish theme and signal scope for an extension towards 0.6339, the Nov 10 ‘23 low.
  • Notably, EURAUD has also broken above downtrend resistance, drawn from the August 2023 high. Yesterday’s spike above 1.70 placed the cross at the highest level since April 2020, shortly after the onset of the pandemic.
  • AUDNZD has also slipped back below the previous cluster of resistance between 1.1030/50, and a further consolidation below 1.10 might signal scope for a deeper retracement towards the June lows at 1.0734.

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  • While RBA Governor Bullock downplayed this week's financial market volatility, Monday’s price action emphasised the Aussie’s sensitivity to a turn in risk, with AUDJPY exhibiting a huge 5.75% range. Furthermore, price action across several AUD crosses highlight the vulnerability to a further deterioration for global market sentiment. Indeed, despite a marginally hawkish RBA overnight, some renewed pressure on major benchmarks has weighed on AUD in recent trade.
  • US ISM Services data offered a near entire reversal off the lows for AUDJPY on Monday, however, given the fragility of equities and the ongoing carry unwind, downside risks remain. Indeed, we have noted that both leveraged funds and asset managers still maintain a deep net short JPY position.
  • The psychological 90.00 mark and 0.8606 (2023 lows) will remain important chart points to consider for AUDJPY. From a short-term perspective, 92.15 is seen as support following the low put in on the WMR fix on Monday.
  • For AUDUSD, a bearish theme remains intact. Monday’s low print highlights a test of key support at 0.6463, the Apr 19 low. A clear break of this level would reinforce a bearish theme and signal scope for an extension towards 0.6339, the Nov 10 ‘23 low.
  • Notably, EURAUD has also broken above downtrend resistance, drawn from the August 2023 high. Yesterday’s spike above 1.70 placed the cross at the highest level since April 2020, shortly after the onset of the pandemic.
  • AUDNZD has also slipped back below the previous cluster of resistance between 1.1030/50, and a further consolidation below 1.10 might signal scope for a deeper retracement towards the June lows at 1.0734.