- Australian dollar’s recovery halts at 0.6350 and the pair pulls back to 0.6300.
- The slump on commodity prices is expected to hurt the AUD.
- FX experts see the AUD/USD biased lower, yet contained above 0.6170.
The aussie opened the day on a strong pace, supported by the improvement in the global risk sentiment. It extended its recovery from Tuesday’s low at 0.6253 to session highs at 0.6350 before turning lower, and retreat to the 0.6300 area.
The slump on commodity prices hurt the AUD
Australia seems to have contained the COVID-19 and ready to start lifting restrictions. This will put the Australian economy on the recovery path while Europe or the US are still looking for the light at the end of the tunnel.
Investors’ optimism, however, does not translate into AUD strength. The market remains concerned that the global economic slowdown will trigger a crunch on commodities, the main driver behind the Australian dollar’s prices.
AUD/USD: Biased lower but unlikely to reach 0.6170
The FX strategists at UOB Group see the AUD/USD under pressure although they do not expect the pair to fall below 0.6170: “We highlighted yesterday that ‘a break of 0.6300 would not be surprising but 0.6260 is likely out of reach’. The subsequent weakness in AUD exceeded our expectation as AUD dropped to 0.6254 before recovering. Downward momentum is showing sign of waning but there is scope for AUD to dip to 0.6245 first before a recovery can be expected. For today, the next support at 0.6210 is unlikely to come into the picture.”
AUD/USD key levels to watch