AUD/USD stays depressed around 0.7300 as RBA’s Lowe cites Aussie-China tussle
|- AUD/USD fades corrective pullback from intraday low of 0.7288.
- RBA’s Lowe suggests keeping strong trade ties with China.
- Aussie Wage Price Index eyed for immediate direction.
AUD/USD seesaws near 0.7300, recently declining to 0.7295, during Wednesday’s Asian session. The pair recently reacted to RBA Governor Philip Lowe’s comments while printing a two-day losing streak. In doing so, the quote also respects sluggish risk-tone amid the coronavirus (COVID-19) woes.
RBA’s Lowe praises bond-buying, touches Canberra-Beijing tension…
In addition to highlighting the importance of Chinese markets for Australia, RBA Governor Lowe also mentioned, “It’s completely right for the government to borrow to support the economy right now.” This justifies the RBA’s recent Quantitative Easing (QE) measures as well as the government stimulus. Recently, New South Wales outlined an extensive program of expenditure and tax cuts for 2020-21 worth about AUD15bn or 0.8% of GDP. This comes in addition to the AUD160bn of stimulus from the federal government, per the Australia and New Zealand Banking Group.
Read: RBA's Lowe: Australia needs to keep strong trade relationship with China
Risk-tone remains sluggish as fears that the virus is pushing Tokyo towards the highest alert level join the previous pessimism concerning European and the US economy due to the pandemic.
That said, S&P 500 Futures takes rounds to 3,600 whereas Tokyo opens with over 0.75% losses by the Nikkei 225.
Aussie Wage Price Index for the third quarter (Q3), expected to remain unchanged at 0.2% QoQ, can offer immediate direction to the pair. Though, virus updates and vaccine news become the key to watch.
Technical analysis
The 0.7340/45 area, comprising multiple tops since early September, holds the key to AUD/USD upside towards the August 31 high near 0.7415. Meanwhile, an ascending trend line from November 02, at 0.7294 now, offers immediate support ahead of Friday’s low near 0.7220. It should, however, be noted that a break of 0.7220 will confirm “double-top” and can attack the 100-day SMA near 0.7160 during the further weakness.
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