Positive risk tone helps AUD bounce off supports

Daily Currency Update

AUD - Australian Dollar

The Australian dollar extended back above 0.74 US cents on Monday, buoyed by a largely positive shift in risk sentiment. Having tracked sideways for much of the domestic session, bouncing between 0.7385 and 0.7410 the AUD rallied overnight, marking intraday highs at 0.7430. Having given up mid-year highs in the wake of the RBA policy update last week the AUD has seemingly found support on moves approaching 0.7380. With critical event risks now behind us we anticipate a much more sedate trading pattern this week ahead of Thursday’s unemployment print. As the South eastern States continue their re-opening, we expect a reasonable jump in the number of Jobs created and an uptick in the underlying unemployment rate as more people rejoin the labour market and the participation rate increases. Labour market performance will be critical in governing RBA policy moving forward. A recovery across the labour market that drives real wage growth could prompt policy makers to adjust forward guidance and bring forward an interest rate hike. That said, we anticipate this month’s print will pass with little fanfare. Direction continues to be driven by broader global forces and corrections in the risk narrative. We continue to watch supports at 0.7380 with resistance on moves approaching recent highs at 0.7550.