Forex Market: AUD/USD remains rangebound due to virus spread ahead of a fresh set of macro data, central bankers’ speeches

AUD/USD traded within a relatively narrow daily range on Monday, as a surge in new COVID-19 cases across the globe and restrictions being reimposed in some areas pressured demand for risk-sensitive currencies.

The total number of confirmed coronavirus cases globally exceeded 10 million, while the death toll surpassed 500,000 on Sunday.

The United States reported more than 44,000 new cases on Sunday. Because of the huge number of new COVID-19 infections, California closed some bars over the weekend, following the example of states such as Texas and Florida. At the same time, re-opening plans have been postponed in the state of Washington as well as in San Francisco.

Meanwhile, Australian authorities are weighing whether to reimpose social distancing measures in some areas, following the sharpest single-day surge in new cases in at least two months on Monday.

Yet, the Aussie found support within the area of 0.6840-6850 for a third straight trading day. AUD/USD has been moving near the lower boundary of a larger trading range (0.6800-0.6980) since mid-June due to concerns over global economic recovery.

“The Australian dollar has started the new week slightly lower after another big sell-off in U.S. markets left the local currency vulnerable to selling,” Steven Dooley, currency strategist at Western Union Business Solutions, said.

“The AUD/USD neared key support at the one-month lows – a level likely to be closely watched this week,” Dooley added.

As of 11:41 GMT on Monday AUD/USD was edging up 0.17% to trade at 0.6877, while moving within a daily range of 0.6846-0.6891. The major pair gained 0.45% last week, while snapping a two-week streak of losses.

On today’s economic calendar, at 14:00 GMT the National Association of Realtors will report on US pending home sales. Contracts to buy previously owned homes in the country probably increased 19.9% in May compared to April, according to estimates. In April, pending home sales plunged 21.8%, or at the steepest monthly rate on record. In annual terms, pending home sales went down 33.8% in April, or the most on record, due to the coronavirus crisis.

At 15:00 GMT Federal Reserve President for San Francisco Mary Daly is expected to speak at the NASPA Virtual Conference on Student Success in Higher Education.

And at 19:00 GMT Federal Reserve President for New York John Williams is scheduled to speak and serve as moderator at an Economic Club of New York event with IMF Managing Director Kristalina Georgieva.

AUD traders will be also paying attention to a speech by Reserve Bank of Australia Deputy Governor Guy Debelle, scheduled at 2:30 GMT on Tuesday. Debelle is expected to speak on “The Reserve Bank’s policy actions and balance sheet” during the Economic Society of Australia webinar.

China’s manufacturing activity report on Tuesday will also be closely watched by market players.

Bond Yield Spread

The spread between 2-year Australian and 2-year US bond yields, which reflects the flow of funds in a short term, equaled 8.5 basis points (0.085%) as of 10:15 GMT on Monday, up from 8.1 basis points on June 26th.

Daily Pivot Levels (traditional method of calculation)

Central Pivot – 0.6867
R1 – 0.6894
R2 – 0.6922
R3 – 0.6948
R4 – 0.6975

S1 – 0.6839
S2 – 0.6812
S3 – 0.6784
S4 – 0.6756

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