The Australian Dollar reversed its move lower, rallying to 0.7020 as risk assets continued to climb with hopes building on a quick economic recovery. Broad-based US Dollar selling also lifted the Battler which rose further to an early Sydney high at 0.70428 this morning. The Australian Dollar has risen a total of 27% since its March 19 lows and a deeper pullback is needed for a healthy uptrend to develop. The increase in risk appetite has seen the Aussie, Kiwi and Loonie outperform. General US Dollar weakness in this past week has added to the Battler’s gains.
Australia and New Zealand efforts to contain the Covid-19 outbreak are considered among the best in the world which has added lustre to the currencies.
Today sees second-tier Australian data with NAB’s Business Confidence and ANZ Job Advertisement reports. There are no major Australian economic reports due this week. Any catalyst will come from US data and the Fed’s policy meeting this week. Markets have all but ignored both Australia’s and the US’s trade tensions with China.
The Commitment of Traders/CFTC report for the week ended 2 June saw net speculative Aussie short bets little changed at -AUD 40,791 from -AUD 40,538. AUD/USD has immediate resistance at 0.7040/50 followed by 0.7080. Immediate support can be found at 0.6990 and 0.6960. As we mentioned in our commentary, given the fundamentals, the Aussie above 0.70 cents for now is on thin air. Look to sell rallies in a likely 0.6950-0.7050 range.