AUD/USD: Retraces from multi-month top above 0.7500, eyes RBA Minutes, China data dump
|- AUD/USD remains depressed after refreshing the highest levels since June 2018.
- Trading sentiment wobbles, downbeat off-late, amid virus woes, Brexit headlines.
- Iron ore, trade talks with the UK and borders with NZ add to the watcher’s list.
- RBA minutes less likely reveal any surprises, China Retail Sales, Industrial Production for November will be important as well.
AUD/USD holds lower ground near 0.7535 at the start of Tuesday’s Asian trading. The aussie pair surged to the fresh high in 30 months during the previous day, before marking a daily negative closing. While everything is jittery, be it Brexit and the fresh coronavirus (COVID-19) concerns from the UK, Europe and the US, US dollar weakness seems to keep the bulls hopeful.
Bears have reasons to celebrate but fail…
Although the weekend headlines concerning Brexit talks’ extension and the covid vaccination in the US and Canada initially favored the risk-on mood, comments from the UK suggesting a new variant of the virus join fears of a no-deal Brexit to weigh the mood. Also challenging the sentiment could be fears of the fresh local lockdowns in more US states while London is up for Tier 3 activity restrictions and Germany has already extended the ban on movements, not to forget Ireland’s fresh lockdown.
Additionally, the European Union (EU) policymakers are optimistic over reaching the Brexit deal, despite conveying differences over the key hurdle, whereas pullback from the record high in iron ore prices, Australia’s main export, also weigh on the AUD/USD prices. It should also be noted that the chatters concerning the US COVID-19 stimulus offer extra optimism to the markets.
It should also be noted that the US dollar index (DXY) declines to a fresh low since April 2018 and expectations of a successful trade deal with the UK, needless to mention the opening of national borders with New Zealand (NZ) in 2021, favor the buyers.
Against this backdrop, Wall Street failed to keep the initial upside momentum as benchmarks close with mixed feelings and minor moves. The US 10-year Treasury yields also eased to 0.896% after a volatile day.
Moving on, RBA minutes for the latest monetary policy will be the immediate catalyst ahead of China’s November data dump. While market players will seek clues of further monetary easing and economic optimism in today’s minutes, nothing earth-shattering is likely to come from the statement. On the other hand, China data have recently lost their importance over the AUD/USD, which might be due to the Canberra-Beijing tussle.
Technical analysis
Unless declining below a six-week-old ascending trend line, at 0.7447 now, AUD/USD is poised to challenge June 2018 top surrounding 0.7675/80.
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