AUD Fragile Post-RBA, Volatile Market Mood on CHF, Yen, and USD

The balanced RBA minutes do not provide much assistance to the AUD. The strongest currencies are still the yen and the Swiss franc, but the dollar is catching up versus other currencies.

Currently, negative risk sentiment continues to support the Swiss Franc and the Yen, as the Dollar tries to catch up. Commodity currencies remain the most vulnerable. The New Zealand Dollar, in particular, has fallen on reports that the Reserve Bank of New Zealand (RBNZ) may delay the much-anticipated rate hike scheduled for tomorrow because of the country’s return to pandemic lockdown. In the Euro and Sterling, there is also new selling.

The same can be said for USD/CHF price movements, which have seen the pair sink to a one-week low in the last two days before recently rallying from 0.9109 to 0.9135, up 0.11 percent intraday by early Tuesday press time. Risk reversals for August 17 showed a -0.075 number, indicating a significant bearish bias among USD/CHF traders. Although the Swiss Franc’s safe-haven allure favors USD/CHF sellers in a risk-off environment, recent buzz about the Fed’s tapering and more optimistic fundamentals have helped the US dollar to hold its own in these uncertain times. As a result, sellers of the pair should hold off until the bearish momentum is confirmed.

Over the last two sessions, the USD/JPY has plummeted dramatically. Because the Japanese yen has previously shown to be more susceptible to regional geopolitical worries, it is projected to strengthen in the next years, as there is a good likelihood that news about tensions with China will become more frequent.

AUD Bears Took Over As Selling Intensifies

The safe-haven US dollar benefited from the market’s risk-off sentiment, which was fueled by concerns over the COVID-induced global economic slowdown. This was interpreted as a crucial element in the AUD severe downward pressure.

Sustained loss below the 0.7330 horizontal support was considered as a major trigger for bearish traders in the technical picture. The selling bias surrounding the AUD was exacerbated by a further drop below the previous YTD lows.

During the early North American session, the AUD/USD pair continued to lose momentum, dropping to its lowest level since November 2020, about 0.7265 in the previous hour.