Recovers Lost Ground

A weaker greenback saw AUD/USD recover some of its recent losses, the pair topped almost exactly ay yesterday's high of 0.7726.

• Westpac Consumer Confidence rose to 111.8 from 109.1 previously, the breakdown of the data saw all subindices rise, including a 3.4% rise in current conditions and a 2.1% increase in expectations.
• RBA Governor Lowe spoke at a business summit earlier in the session, he said that he is more comfortable with a lower rather than higher AUD, would be more comfortable with even lower levels. He said a lower AUD would help unemployment fall, and that the recent move lower in AUD/USD is a broader function of recent USD strength, thus he cannot say that AUD is overvalued.
• CBA remain positive on the prospects for AUD: "Australia's successful virus containment has contributed to its 'v‑shaped' economic recovery. With the covid vaccines being rolled out, the Australian economy could accelerate. There is a risk the labour market tightens earlier than expected. As a result, the RBA may tighten monetary policy before the FOMC which poses upside risks to our AUD/USD forecast profile."
• From a technical perspective AUD/USD is weak and remains vulnerable following the sharp sell-off from 0.8007, Feb 25 high. Last week's sell-off reinforced bearish conditions which saw prices fall through 0.7693, Feb 26 low. This signals scope for a stronger bear leg and opens 0.7564, Feb 2 low. Firm short-term resistance has been defined at 0.7838, high Mar 2 and 3. A break would allow for a stronger short-term rally.
• There is no more domestic data on the docket tonight, but markets will focus on Chinese inflation data at 0130GMT/1230AEDT, as well as iron ore export data from Port Hedland.