AUD/USD: Bears attack 0.6400 as trade war fears spread faster
- AUD/USD stays on the back foot around the one-week low.
- US President Trump, Secretary of State Mike Pompeo add fuel to the US-China trade war concerns.
- Gilead’s Remdesivir will be available to the coronavirus patients this week.
- Australia’s TD Securities Inflation, Building Permits and ANZ Job Advertisements will decorate the calendar.
AUD/USD drops further towards 0.6400, currently near 0.6406, after flashing the gap-down weekly opening to 0.6413 at the start of Monday’s Asian session. In addition to the coronavirus (COVID-19), the US-China trade war fears have been the latest catalyst weighing on the market’s risk-tone sentiment.
Read: What you need to know as markets open: Pompeo and Trump ratcheted up US and China tensions
US-China fights back in motion amid tough times…
The US and China fail to keep the peace for long and jostle even amid the global crisis triggered through the coronavirus (COVID-19). US President Donald Trump initially diverted the allegations of mishandling the virus outbreak to trade deal with China. However, his recent comments were severe as they suggest an intentional act of hiding virus facts and Wuhan’s laboratory being the epicenter of the outbreak.
Also joining the show, while following the footsteps of President Trump, US Secretary of State Mike Pompeo said on ABC’s This Week, “We can confirm that the Chinese Communist Party did all that it could to make sure that the world didn't learn in a timely fashion about what was taking place.”
It should also be noted that the comments from the US policymakers are likely to be backed by the intelligence report, as per the AP, which in turn could magnify the drama.
On the other hand, Chinese news didn’t avail Friday’s off to criticize US diplomats but failed to provide any strong measures to turn down the allegations.
Also weighing on the risk-tone could be the news from Axios suggesting that the US Republican Senate Conference want to wait before passing another coronavirus stimulus package.
Not everything is negative. The positive news comes from Gilead Science where the CEO announced to donate all the supplies of the much-championed drug to combat the pandemic. The CNBC mentioned that Gilead’s Remdesivir will be available to the parents this week.
Other than the US-China trade war fears, weakness in global economics, as well as downbeat performance of Wall Street, also portrayed the risk-off sentiment on Friday.
Moving on, Aussie traders will have second-tier Inflation, housing and job numbers to take intermediate clues from. TD Securities Inflation, up for publishing at 01:00 GMT, becomes the first one to watch. The early inflation gauge will have to cross 1.5% YoY and 0.2% MoM figures for March to turn down the dovish calls for April month RBA. Following that, expected declines in March month Building Permits to -15% from 19.9% prior, coupled with ANZ Job Advertisements, prior -10.3%, could also direct near-term Aussie moves.
Technical analysis
A daily closing below the monthly ascending trend line, currently around 0.6410, becomes necessary for the bears to enter and target 0.6340 mark comprising 21-day SMA. Until then, the pair’s another attempt to challenge 100-day SMA, near 0.6565 now, can’t be ruled out.
Author
Anil Panchal
FXStreet
Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.
