What an ugly fall this week

What an ugly fall this week

The final tell for an Australian dollar capitulation should have been yesterday's jobs report. The numbers for July were surprisingly good and yet AUD/USD could only muster a 10 pip rally on the headlines.

To be fair, it landed at a time of incredible USD/JPY buying and it's a dated report with some caveats, but just 10 pips? That was a red flag.

Of course it's all easy in hindsight and AUD/USD went on to sink 1.1% on the day.

The main problem for AUD is covid. Cases are hitting records daily in New South Wales and the lockdown strategy isn't going to work. Eventually the vaccines will kick in but Australia is going to pay the price for a slow vaccination rollout for a few months.

The chart is certainly a falling knife and the big question is whether or not 0.7000 holds.