AUD/USD awaits fresh clues to extend coronavirus-led losses towards 0.6700
|- AUD/USD sellers catch a breath after risk-off snapped the three-day winning streak the previous day.
- Justifications to the spike in coronavirus cases from China, political plays abroad seem to play their roles.
- An absence of major data/events from Australia will keep market attention to coronavirus/political news, US Retail Sales will be the key afterward.
AUD/USD seesaws around 0.6720 at the start of Friday’s Asian session after snapping the three-day run-up the previous day. The Aussie pair’s recent declines could be attributed to the sudden spurt in coronavirus cases from China’s Hubei, the epicenter of the deadly disease. Also weighing on the quote could be broad US dollar strength. Even so, political plays in the US seem to have played their role in challenging further declines.
A change in the methodology for diagnosing the epidemic caused a noticeable increase in the cases and triggered the market’s risk-off sentiment on Thursday. However, the reason was later on revealed, coupled with positive comments from China’s UN envoy, but could placate sellers only mildly. “The sharp increase in the number of new coronavirus infections in China reflects a "broader definition" of cases,” a spokesperson for the World Health Organization (WHO) said on Thursday.
Elsewhere, news that the US President Donald Trump is likely to withdraw his nomination of the controversial Fed nominee Judy Shelton seems to have affected the market’s risk-tone off-late. Also contributing to the mood could be the Senate verdict to limit the President’s power to go to war with Iran.
That said, the US 10-year treasury yields remain mostly unchanged around 1.62% whereas Wall Street benchmarks failed to extend the previous three-day rise.
Amid the broad risk play, traders paid a little heed to the RBA Governor Philip Lowe’s upbeat comments. Though, Inflation and Jobless Claims from the US managed to keep the greenback positive.
Moving on, there is no major data/event from Australia but a meeting of China’s Politburo may grab the headlines. During the US session, Retail Sales and the preliminary Michigan Consumer Sentiment data could entertain the momentum traders. “Huge swings in the unadjusted data make forecasting retail sales especially challenging in December and January, but we anticipate a slightly below consensus 0.2% rise in total sales in January; the consensus is up 0.3%. We look for a modest decline in the preliminary release of UMich's sentiment index: to 99.0 in February from 99.8,” said TD Securities.
Technical Analysis
The pair’s U-turn from a descending trend line stretched since January 01, 2020, at 0.6730 now, directs it to 0.6700 round-figure ahead of challenging the latest low near 0.6660. On the contrary, 21-day SMA near 0.6770 adds to the resistance.
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