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AUD/USD is moving into negative territory as well-off in US equities continue

  • AUD/USD is closely correlated to the performance of US equities and is falling in tandem.
  • US earnings and Aussie jobs market data will be key for AUD/USD.

At the time of writing, AUD/USD is trading at 0.6939, the lows of the day and has fallen from a high of 0.6992. 

As per the start of the week's analysis, the price is in the barroom brawl, trading between breakout support and resistance levels on the longer-term time frames: Chart of the Week: AUD/USD bears seeking a double top for H&S downside targets

Technically, there are arguments for both ways fro a technical standpoint, but so long as US equities can withstand the spread of the coronavirus, investors will buy them which has been supportive to risk-FX of late, such as the Aussie. 

However, Australia is experiencing a severe Covid-19 wave of its own which has forced Victoria into a lockdown. Until there is a significant slow down in cases, AUD could struggle to gain traction much beyond 0.7000, especially with the Labour data in Australia this week.

We pencil in a rebound as lockdown restrictions were eased in June. A rebound would be consistent with a number of surveys such as Seek and ANZ job ads over June as well.

As such we are expecting a pickup in the participation rate to 63.4%, but we have the unemployment rate easing a touch to 7% on our assumption the population declined 30k on the month,

analysts at TD Securities explained. However, fresh lockdowns could well neutralise anything positive in the June data. 

Eyes turn to earnings

S&P 500 Index Forecast: Bank's earnings in focus, COVID-19 induced insolvency fears simmer away

The S&P 500 will be a key theme on Q2 earnings this week and traders watching the banks for guidance. AUD will likely be tracking the sentiment on Wall Street, so it will be a key event. 

AUD/USD levels

 

JP Morgan, Wells Fargo and Citi post earnings on Tuesday here is what to expect

Banks are expected to put aside some funds for loans that may have defaulted during the COVID-19 pandemic. On the other end of the stick, there could
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Gold Price Analysis: XAU/USD just dipped below $1800

XAU/USD had been positive earlier in the session but there has been a turnaround in risk sentiment and stocks and gold has sold off during the late ho
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