AUD/USD returns above 0.7100 and turns positive on the day

• AUD/USD regains lost ground and pops up above 0.7100.
• The aussie appreciates with US dollar losing steam as risk aversion eases.
• AUD/USD aiming below 0700 – Westpac.

The Australian is on track for its second positive day in a row after having opened the day on a weak footing. The pair bounced from 0.7085 earlier today and managed to reverse previous losses returning to levels above 0.7100.

Aussie picks up as equity markets turn positive

The Aussie is finally pushing higher on Wednesday’s US trading session buoyed by a moderate improvement on market sentiment after US Home Secretary, Nancy Pelosi boosted market sentiment urging to reach a deal on the US coronavirus aid package.

Pelosi’s comments have spurred a moderate recovery on equity markets, with Wall Street in the green after a negative opening. Trump had dampened stimulus' hopes earlier today, accusing Democrats in Twitter of not willing to reach an acceptable compromise. Trump’s comments triggered a strong risk-averse sentiment, which boosting the USD against riskier currencies.

Australian dollar’s upside attempts, however, remain weighed by the RBA’s monetary policy stance, especially after the Bank acknowledged earlier this week that further monetary tightening was on the table on their last meeting, which has paved the path for an interest rate cut in November.

AUD/USD aiming below 0.7000 towards 0.6965 – Westpac

From a longer-term perspective, the FX analysis team at Westpac expect aussie’s upside attempts to be limited below 0.7145: ““Improvement in domestic spending will not do much to reverse a likely rise in unemployment, keeping the RBA on track for a major policy loosening on November 3. There is quite a range of expectations but the RBA has made clear that a lower A$ would be a helpful by-product.  This local headwind for the Aussie combines with a skittish mood in global equities, as agreement on US fiscal support remains elusive and the election draws closer, boosting volatility (…) Look for rallies to fail into 0.7155/68 resistance, with 0.7000 to give way to 0.6965, which would be well received at the RBA.”

Technical  levels to watch