AUD Outlook – Australian Dollar Weak with Complacency Building

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  • The AUD highly likely to be affected by the broader market sentiments
  • AUD might keep marching high incase low volatility is maintained
  • Reserve Bank of Australia minutes, the impact of COVID-19 lockdown measures could undermine the Australian dollar

The AUD has surged a new rally against its USD counterpart since the AUD/USD price action declined in March amidst peak COVID-19 fear. Along with the increased risk appetite and the significant retracement lower in the new volatility. The Aussie bulls seem to have driven the sentiment associated with AUD/USD higher. Highlighted by the 1-week AUD/USD showed volatility readings, the volatility would most likely drop even further. This might help keep this Australian dollar in more demand excluding no unexpected bearish trends unfold.


Having said that, the AUD has lost the upside trend momentum more often. This seems to further correspond with the additional COVID-19 measures being put into effect around larger areas of Australia and follow the first upbeat reaction to the latest RBA meeting. For example, Melbourne has also placed under phase four lockdown for about 6 weeks. Whereas phase 3 lockdown was also announced for the larger Victoria.

The AUD price action and the Australian dollar currently stands to face some challenges in turn. Especially because there is enough evidence that the retracement in the economic activities is already showing stalling signs. Not to forget, as shown in the newest RBA meeting report, the outlook of the new economic recovery is highly dependent on the virus containment as US Dollar Fading Demand & Ethereum, Bitcoin Outlook Bullish.

AUD might keep marching high incase low volatility is maintained

The minutes of the RBA meeting will be released in the coming week, on August 18. The RBA minutes could highlight how the monetary stimulus. The accommodating fiscal policy measures might be required for a while considering the fundamental outlook of the labor market and the economy at large. Contrasted against this backdrop of the possible 2nd wave and newly enforced lockdown measures. There is a high possibility that the employment situation and the Australian economy might weaken.

Moreover, it’s worth noting that the RBA highlighted how the federal reserve made plans to start buying the 3-year Aussie government securities (AGS) after the yields rose over the 25-basis point and the yield curve controlling the target. This will be the first time that the RBA purchases AGS in a few weeks. On the other hand, if the release of the RBA minutes will deliver a deep undertone pointing towards the needs for additional fiscal support. There might be potential for the AUD to splutter out.

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