US Dollar strength forces the Aussie back below 0.72

Daily Currency Update

The Australian Dollar surged to an eight-month high yesterday topping 0.7275 on the charts vs the Greenback fuelled by a combination of factors including increased demand for risky assets and accelerating commodity prices especially in iron ore and gold. Unfortunately the move was short-lived and lost all ground in the late hours of the North-American session as Gold prices dropped 3% following the release of the US Federal Reserve minutes. In the July monetary policy meeting the Fed said they saw little benefits from a yield curve control program, whilst at the same time shed little light on any new initiatives from the central bank.
Locally, we saw the release of Westpac-Melbourne Institute Leading Index, the index is designed to predict the direction of the economy and recent figures show the growth rate still to be in negative territory rising to -4.37 percent in July from -4.43 percent in June. With Victoria representing around 25%, the economic contraction in the state caused by the hard lockdown following the renewed virus outbreak will offset the ongoing recovery in other states, said Westpac.
Opening this morning around 0.7180, we can expect to see near-term support levels at 0.7170 followed by 0.7135. On the upside, resistance sits at 0.7245 and 0.7280. Looking ahead, there are no scheduled releases today so we can expect the Aussie to take direction from commodities and equities.