AUD/USD traded with modest losses near 0.7100 mark, lacks follow-through
|- AUD/USD witnessed some selling on Thursday amid a modest USD rebound.
- The slow progress in the US stimulus talks drove some haven flows to the USD.
- Dovish RBA expectations undermined the aussie and added to the selling bias.
The AUD/USD pair edged lower during the Asian session, albeit lacked any strong follow-through and was last seen hovering near the 0.7100 mark.
A combination of negative factors failed to assist the pair to capitalize on the previous day's goodish recovery move to weekly tops, instead prompted some fresh selling on Thursday. The global risk sentiment took a hit on the back of slow progress in the US stimulus talks. This, in turn, helped revive the US dollar's safe-haven demand and exerted some pressure on the perceived riskier aussie.
Investors remain sceptic that any fiscal package can actually pass through the Republican-controlled Senate before the November 3 election. Adding to this, the US President Donald Trump accused Democrats on Wednesday of being unwilling to craft an acceptable compromise on stimulus. Moreover, there remains a strong opposition from within Trump’s own Republican Party over a bigger stimulus bill.
Apart from this, expectations that the RBA will cut interest rates in November exerted some additional downward pressure on the Australian dollar and further contributed to a softer tone surrounding the AUD/USD pair. However, the downside remains limited, at least for the time being, as the focus remains on the progress towards passing the additional US fiscal stimulus measures.
Moving ahead, market participants now look forward to the release of the US Initial Weekly Jobless Claims. The data, along with the broader market risk sentiment and the US stimulus headlines, will influence the USD price dynamics and produce some short-term trading opportunities.
Technical levels to watch
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