Underpinned By Equity & Copper Rally

An extension higher in copper and e-minis helps underpin the Antipodeans, with the Kiwi and Aussie outperforming all G10 peers on the day.

• Firmer-than-expected Chinese industrial production data would have supported both in Asia hours, with the AUD also benefitting from a marginal recovery in iron ore prices.
• The RBA issues it’s latest monetary policy decision on Tuesday.
• We expect some form of tightening bias to be retained in March as the data since the last meeting has been broadly in line with the RBA’s projections, while the significant uncertainties discussed last month have not dissipated and the risks are still “broadly balanced”. Thus the meeting statement will probably be little changed compared with February.
• Our full preview can be found here.
• Technically, AUD/USD remains below its recent highs. The latest pullback appears to be a correction. The pair has traded through support around the 50-day EMA - at 0.6571. A clear break of this average would signal scope for a deeper pullback towards the next key support at 0.6478, the Mar 5 low.
• On the upside, clearance of resistance at 0.6668, the Mar 8 high, is required to resume the bull cycle and this would open 0.6708, a Fibonacci retracement.