AUD/USD: Depressed near 0.7500, braces for yearly low on coronavirus concerns, firmer USD
|- AUD/USD edges lower inside a 10-pips range after three-day downtrend.
- Australia keeps local lockdowns, strict border restrictions amid virus resurgence.
- US dollar benefits from risk-aversion, upbeat data and the quarter-end moves.
- China Caixin Manufacturing PMI, Aussie Trade Balance will provide immediate direction, risk catalysts are the key.
AUD/USD seesaws around 0.7500, takes a breather following three-day fall to weekly low, amid the early Asian morning on Thursday. The Aussie pair’s latest south-run could be linked to the coronavirus (COVID-19) woes in Australia as well as the broad strength of the US dollar.
Major parts of Queensland, New South Wales, the Northern Territory and Western Australia witness local lockdowns with strict border control as the Oz nation struggles with the Delta variant outbreak. While the cases are mostly linked and marked traceable, the central government’s stand over ignoring AstraZeneca vaccine for blood clotting issue gets high criticism from states. It’s worth noting that a 4.0% fully-vaccinated Australian count pushes Canberra to speed up on its jabbing.
Other than the covid fears, China’s weaker-than-previous official PMIs and upbeat US ADP Employment Change for June also contributed to the AUD/USD pair’s weakness.
Additionally, the US dollar’s strength adds to the pair’s downside as the greenback gauge ended Q2 2021 with the strongest monthly gains in 4.5 years. While upbeat economics back hopes for firmer US NFP and keep the greenback stronger, uncertainty over the Fed’s next move and hawkish Fedspeak offer extra strength to the US currency. Recently, Fed's Robert Kaplan reaffirmed his hawkish stance and said, ''I’d want to taper sooner than the end of the year.''
Amid these plays, Wall Street marked mixed performance whereas the US 10-year Treasury yields dropped 1.2 basis points to 1.468%. Further, the US Dollar index (DXY) jumped to the highest since early April.
Looking forward, Australia trade numbers for May and China Caixin Manufacturing PMI for June will offer immediate direction to the pair, not to forget the covid updates and other risk-related headlines. However, major attention will be given to the US ISM Manufacturing PMI and Jobless Claims for the day as they will offer clearer signs for tomorrow’s US Nonfarm Payrolls (NFP).
Forecasts suggest a mixed view of the Aussie and China data to keep AUD/USD pressured towards the yearly low amid downbeat qualitative catalysts. However, any negative surprises from the US numbers may trigger the pair’s consolidation move later in the day.
Technical analysis
A pullback from the 0.7600 threshold precedes a clear downside past 200-DMA to keep AUD/USD bears directed to the year low near 0.7475 ahead of the August 2020 top around 0.7415. Meanwhile, any bounce below the 0.7565 level, comprising 200-DMA, becomes immaterial.
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