AUD/USD retreats to 0.7300 area in choppy day

The AUD/USD pair climbed to a daily high of 0.7334 in the early trading hours of the Asian session but reversed its direction amid a lack of significa  |  18/09/2020 12:34
  • AUD/USD struggles to make a decisive move in either direction on Friday.
  • US Dollar Index stays flat below 93.00 ahead of the American session.
  • UoM Consumer Sentiment Index will be featured in the US economic docket.

The AUD/USD pair climbed to a daily high of 0.7334 in the early trading hours of the Asian session but reversed its direction amid a lack of significant market drivers. As of writing, the pair was virtually unchanged on a daily basis at 0.7310.

In the absence of macroeconomic data releases from Australia, the sharp upsurge witnessed in the positively-correlated NZD/USD pair helped AUD/USD gain traction n Friday. Earlier in the day, New Zealand's finance minister, Grant Robertson, said a stronger-than-expected economic recovery would likely allow the Reserve Bank of New Zealand to keep the policy rate unchanged in early 2021.

Meanwhile, the US Dollar Index (DXY) is staying relatively calm below 93.00 following Thursday's drop and not providing a direction clue to AUD/USD.

In the second half of the day, the University of Michigan will release its preliminary Consumer Sentiment Index data for September. Investors expect this data to show a slight improvement in consumer confidence. 

AUD/USD outlook

Westpac analysts expect AUD/USD to advance toward 09.7400 over the next month.

“Local and regional economic trends underscore a continuing bullish A$ story. August employment grew 111K, well ahead of expectations for a 35K decline," analysts explained. "There are always grounds for caution over the quality of the jobs being reported and unemployment will rise as JobKeeper is reduced in Q4, but the RBA’s 10% end-2020 forecast will need to be revised.”

Technical levels to watch for

 

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