CBA states danger of correction of Australian dollar
Australian dollar has been holding its positions quite well, but the development of upward movement in recent weeks has been slipping, and the atmosphere in the financial markets has gradually worsened, and analysts of Commonwealth Bank of Australia see the risks of aussie transition into a phase of correction.
The bank notes that the suspension of restrictions' lifting in a number of U.S. states and their tightening in Texas amid the sharp increase in the number of confirmed cases of COVID-19 undermines the hope for a rapid recovery. Market participants remain convinced that the government will not dare to impose a new lockdown, but they are increasingly concerned that the return to previous indicators will be stretched over time. In the case of Aussi, they are not optimistic about the fact that the coronavirus is acute in Victoria, particularly in Melbourne.
The CBA also sees the risk of an increase in risk premiums in the face of rising geopolitical risks. Trump administration said on Wednesday that a number of large Chinese companies are controlled by the Chinese military - experts say this could be a preparation for new US sanctions.
CBA analysts note that the technical picture is in favor of AUD/USD consolidation, and recommend to monitor the support around 0.6840/20. Breakthrough below will open the way to mid-June lows around 0.6775, while the next target will be 23.6% of growth since March at 0.67.