Scope For Bullish Retracement

Spot AUD/USD has seen a touch of capitulation after a lower USD in the wake of a weaker than expected US NFP number on Friday saw the pair touch the highest levels since mid-July. The pair rose as high at 0.7478 before pulling back slightly, the rate last down 10 pips at 0.7541.

• In terms of local news, the weekend saw NSW register another record in its daily COVID case count (1,533), Victoria reported 246 new cases, continuing the rising trend of the past week. Australian PM Morrison reiterated his focus on moving past the era of lockdowns and state border restrictions by Christmas.
• From a technical perspective AUD/USD continues to climb and now sits solidly above the 50-day EMA. A clear break of this average signals scope for a stronger bullish retracement with attention on 0.7487, the Jul 15 high and a key near-term resistance. Clearance of this hurdle would strengthen bullish conditions. On the downside, key support to watch is at 0.7222, Aug 27 low. A break would signal a reversal. Initial support is at 0.7312, the 20-day EMA.
• Monday provides lower tier domestic economic releases in the form of ANZ job ads and the Melbourne Institute inflation readings. However, the broader focus this week will fall on the latest RBA decision, specifically on whether the RBA decides to renege on its tapering move (more colour on this matter will be provided in our full preview, which will be published in the coming hours).