July 21, 2021 14:29:47

Monday’s risk rout saw the commodity currencies get pummelled earlier this week, but they are endeavouring to claw back their losses. The Aussie has been the worst hit major, falling on the week and also on the month and is lagging the other commod-$s today. Virus lockdowns are still in place in Australia and extending to other states while retail sales disappointed overnight, falling 1.8% m/m versus an expected decline of 0.7%.

AUD/JPY below major SMA

 The ultimate risk gauge as a currency pair has historically been AUD/JPY. Prices fell from a high of 85.80 in mid-May and broke the long-term support line soon after. Monday saw the pair cut through the 200-day SMA at 81.14 and this now becomes resistance to any move higher in the short-term. But crucially, the risk selloff was supported by the 23.6% Fibonacci retracement of its March 2020 to May 2021 gains at 79.68 with prices just stopping short of this level at 79.83. The January-February zone is also acting as support, but the bulls will want to get above 81.32/34 and then the June low at 82.78 to get back into this year’s main range.

AUD/CAD on big support

The AUD/CAD downtrned has paused over the last few weeks, tracking sideways above and around 0.93. Monday’s oil collapse saw the pair spike higher touching the upper channel but the soft close warned that the downtrend might resume soon. The bears are now testing recent lows around the support zone at 0.9247/61 which is also the mid-June 2020 lows and the October 2020 trough. The MACD has just turned red so warns the bears might have their way if this momentum picks up. Targets to the downside include the 50% retrace level of the March 2020 to Febarury 2021 gains at 0.9031 while near-term support comes in at 0.9155.