Ticks Lower In Early Trade

AUD/USD finished the session broadly flat on Friday, hugging a narrow range through the session. The pair is under a modicum of pressure in early trade as the greenback finds some favour from safe haven flows after Goldman Sachs downgraded US growth forecasts. The pair last trades at 0.7300, down 8 pips on the session.

• From a technical perspective AUDUSD outlook remains fragile following recent weakness. 0.7194 has been cleared, 76.4% of the Aug 20 - Sep 3 rally and this sets the scene for a move towards 0.7106, the Aug 20 low and the bear trigger. A break would confirm a resumption of the broader downtrend that started late February. Initial firm resistance is seen at 0.7325, the 50-day EMA. Markets showed above here momentarily on Friday, before swiftly fading.
• Commodity prices have been one of the major drivers of AUD; Port Hedland iron ore export figures are scheduled to be released today or tomorrow. Iron ore has recovered from lows hit in September as Chinese steel mills increased stocks ahead of the Golden Week holiday, but iron ore futures remain below peaks hit in July. Fortescue Metals Group CEO Gaines said on Friday that China's steel production restrictions may ease heading into 2022 to meet strong demand.
• On the effect of commodity prices on AUD CBA says: "Electricity supply constraints in China, the UK and Europe suggest volatility can continue in the near term. We expect AUD to remain heavy over the remainder of the year, though 0.7170 is providing solid support recently. The outlook for the FOMC's tightening cycle and slowing Chinese growth momentum are weights on AUD. Lower iron ore prices can also weigh on AUD at the margin. However, we expect lower iron ore prices will have a larger impact on AUD fair value than on AUD spot."
• There are no releases on the domestic slate today, but looking ahead this week will bring the NAB business survey, Westpac consumer confidence and labour market data which will capture the impact of lockdowns.