AUD/USD – Retreats Off 0.70 cents Belted by Melbourne Lockdown

The Aussie Dollar retreated after failing to clear 0.70 cents yesterday after Victoria’s Premier Daniel Andrews reimposed stage 3 stay-at-home restriction in Melbourne, the country’s second largest state. Which means stay at home except for 4 reasons to leave, namely, essential shopping, giving or receiving medical care, attending work (if it cannot be done from home), and for exercise – within metropolitan Melbourne. As with the previous lockdown, cafes, restaurants, and bars will be allowed to open only for takeaway sales. Melbourne is Australia’s second largest city with almost 5 million people.

In other developments yesterday, the RBA kept interest rates unchanged. The RBA also said that the virus’ damage to the economy should be less severe than they feared but also showed their willingness to keep their policies easy for the time being.

DailyFX-IG AUDUSD H1 Chart - 08 July 2020
DailyFX-IG AUDUSD H1 Chart – 08 July 2020

Market positioning in the Aussie from the latest Commitment of Traders report (week ended 30 June) saw further cutting of Aussie short bets to -AUD 2,908 from the previous week’s -AUD 4,810 which is practically square. This is the smallest number of shorts and the least bearish in the Aussie in more than 2 years.

AUDUSD has immediate resistance at 0.6970 and 0.7000. Immediate support can be found at 0.6920 (overnight low 0.69221). The next support lies at 0.6890. With the speculative market practically square, there is more potential downside to the Battler should the market’s risk aversion stance extend. Look for a likely range today of 0.6870-0.6970. Prefer to sell rallies.

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