Resumes Downtrend; COVID Matters Dominate Outlook

The greenback finished higher on Friday which saw AUD/USD close the session with some minor losses, dropping from intraday highs of 0.7390 in the Asia-Pac time zone to close at 0.7367; the pair last trading at 0.7366.

• Local COVID matters will continue to dominate, with suggestions in the press that NSW is conducting financial modelling for a lockdown in the Greater Sydney area through at least mid-September. There are also some suggestions that the NSW Treasurer will again request a restart of the JobKeeper scheme. The weekend also saw thousands protest the lockdowns across some of the country's major cities. Finally, Australia has signed an agreement for the purchase of 60mn additional Pfizer-BioNTech COVID vaccination doses, to be delivered in '22, and a further 25mn doses in '23, which would allow the country to conduct a vaccination "booster" scheme if needed.
• From a technical perspective the AUD/USD outlook remains bearish. This follows the recent sell-off and a breach of the channel base at 0.7360. The channel is drawn from the Feb 25 high and despite the fact that price is back in the channel area, the move lower marks an important short-term technical break. Scope is for weakness towards 0.7235 next, the 1.236 projection of the Feb 25 - Apr 1 - May 10 price swing. On the upside, initial resistance is seen at 0.7429, Jul 19 high.
• There is no domestic data on the docket today, markets await CPI figures later in the week.