• RBA might ease in November, undermining the Aussie.
  • Pandemic helps USD strength as safe-haven bids pile up.
  • US data awaited for fresh impetus.

AUD/USD trades near the daily lows today during the early European session, near 0.7075-70.

The weakness was due to the expectations of continued dovishness from the Reserve Bank of Australia. Its governor Philip Lowe comments on Thursday indicated that the central bank would prefer to cut interest rates or pursue further stimulus measures in the November meeting. The selloff triggered by the clue continued today, and the pair drifted to the area surrounding the three-week low posted yesterday.

The policy action might have been influenced by the heightened worries recently about the jump in the number of new coronavirus cases. The pandemic might force new lockdown restrictions and pull down global economic recovery. Such fears in the markets increased the appeal of the safe-haven status of the US dollar and affected the demand for pro-risk currencies like AUD.

Nevertheless, the equity markets aren’t showing much weakness, and the US Treasury bond yields are also soft, both working against the US dollar strength. Hence it is better to wait for follow-through selling in the AUD/USD below 0.7055, before positioning for a bearish move.

The US monthly Retails Sales, the Industrial Production data and the preliminary estimate of the October Michigan Consumer Sentiment Index are awaited in the economic docket for the day and these along with market sentiments will drive the action in AUD/USD.