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AUD Forecast: Australian Dollar Vulnerable as Complacency Builds

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AUSTRALIAN DOLLAR FORECAST – AUD PRICE ACTION EYES SUBDUED VOLATILITY DESPITE EXTENDED VIRUS LOCKDOWNS; RBA MINUTES ON DECK

  • The AUD possible stands to be strong-armed by broader market sentiment
  • Australian Dollar might hold marching greater if the absence of volatility is sustained
  • RBA minutes, influence of coronavirus lockdown measures may undermine the Aussie

The Australian Dollar has notched an astounding rally towards its US Dollar peer since AUD/USD worth motion bottomed in March amid peak coronavirus panic. Alongside bettering danger urge for food, as nicely as a notable retracement decrease in currency volatility, Aussie bulls have steered the sentiment-linked AUD/USD broadly greater. Indicated by one-week AUD/USD implied volatility readings, volatility is predicted to subside additional, which might assist hold the Australian Dollar in demand barring no surprising bearish developments unfold.

AUD/USD MIXED

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Change in Longs Shorts OI
Every day -8% 1% -3%
Weekly 9% 4% 6%

AUD/USD PRICE CHART: DAILY TIME FRAME (14 FEBRUARY TO 14 AUGUST 2020)

AUD Price Chart Australian Dollar Forecast AUDUSD Implied Volatility

Chart created by @RichDvorakFX

That mentioned, the Australian Dollar has misplaced upward momentum extra not too long ago. This seems to correspond with prolonged coronavirus lockdown measures enforce throughout main areas of Australia and follows an preliminary upbeat response to the RBA assembly. Melbourne, for instance, was positioned below a stage-four lockdown for six weeks whereas a stage-three lockdown was introduced for broader Victoria.

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The Australian economic system and AUD worth motion possible stands to face headwinds in flip – notably seeing that there’s proof that the rebound in financial exercise has already confirmed indicators of stalling. To not point out, as detailed within the newest RBA assembly press assertion, the form of the financial restoration is “dependent upon containment of the virus.”

RBA MEETING MINUTES MIGHT UNDERSCORE PROLONGED NEED FOR ACCOMMODATIVE POLICY

Australian Dollar Forecast RBA Meeting Minutes August 2020

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RBA assembly minutes are scheduled for launch this coming Tuesday, August 18 at 01:30 GMT. The RBA minutes may underscore how fiscal stimulus and accommodative financial coverage measures “can be required for a while given the outlook for the economic system and the labour market.” Contrasted towards the backdrop of a possible second wave and freshly-enforced lockdown measures, it’s attainable that the Australian economic system and employment scenario, along with AUD worth motion, might weaken.

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Additionally price mentioning, the RBA outlined how the central financial institution deliberate to renew buying 3-year Australian Authorities Securities (AGS) after yields climbed above 25-basis factors and its yield curve management goal. That is the primary time the Reserve financial institution of Australia bought AGS in a number of weeks. Correspondingly, if the upcoming launch of RBA minutes delivers a deeper undertone hinting at a necessity for extra financial assist, there might be potential for Australian Dollar power to sputter out.

Preserve Studying – Australian Dollar Forecast: AUD/USD, AUD/NZD Ranges to Watch

— Written by Wealthy Dvorak, Analyst for DailyFX.com

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