AUD/USD: Bears await RBA minutes to battle 0.7055/50 critical support

• AUD/USD attempts recovery moves from 0.7057, nears three-week low flashed on Friday.
• Receding hopes of US stimulus, Brexit deal and worsening virus conditions heavy the risks off-late.
• China data, Trump’s comments managed to offer early-Monday recovery.
• Speech from RBA’s Kent, RBA minutes in the spotlight amid a light calendar elsewhere.

AUD/USD struggles to keep bounces off 0.7055/50 rest-zone, currently around 0.7070, at the start of Tuesday’s Asian session. Having initially benefited from risk-on mood during the early Monday, the quote marked losses by the end of the day as hopes of further stimulus, virus vaccine and a Brexit deal fade despite initial optimism. Traders await comments from RBA policymaker, followed by the RBA minutes, to determine immediate moves while nearing the key support line stretched from June 15.

Everything depends upon the politics…

Be it the US Democratic-Republican jostling over the coronavirus (COVID-19) stimulus or the UK’s refrain from appreciating the European Union’s (EU) recent softness, politics play the key role in each play. Also, there are concerns about US President Donald Trump’s push for the COVID-19 vaccine as the White House Chief keeps lagging in the polls concerning the next week’s presidential election. As a result, markets fail to keep the upbeat sentiment portrayed during early Monday amid the same fears faced late last week.

Having heard about a 48-hour deadline to the White House, till Tuesday night, for the pandemic relief package talks by US House Speaker Nancy Pelosi, traders knew that Treasury Secretary Steve Mnuchin and Democratic representative Pelosi see major differences to seal the deal. Even so, US Senate Majority Leader Mitch McConnell signaled that there will be a vote on the much-awaited stimulus during this week. This contrasts the comments from Minority Leader Chuck Schumer who recently said that the Republican proposal remains unacceptable.

Elsewhere, the EU showed readiness to enthuse efforts of writing the Brexit deal but the UK doubts the bloc’s readiness to overcome the key issues like fisheries, level playing field and governance.

Furthermore, US President Trump’s comments suggesting that the COVID-19 vaccine will be out very soon differ from the halt in the clinical trials of the headline contestants.

Talking about the data, China’s Q3 GDP managed to mark recovery moves, despite lagging the forecast, whereas Industrial Production and Retail Sales also improved in September.

Against this backdrop, Wall Street benchmarks lost over 1.0% by the end of Monday’s trading whereas the US 10-year Treasury yields marked a gain of 2.8 basis points (bps) at the same time.

Moving on, RBA Assistant Governor (Financial Markets) Christopher Kent will cross the wires at 23:30 and will be watched to confirm last week’s bearish comments from the RBA Governor Philip Lowe. Following that minutes of the latest monetary policy meeting by the Reserve Bank of Australia (RBA) will be closely observed to ascertain the pessimism among the policymakers. It’s worth mentioning that the risk catalysts are likely to keep the driver’s seat in any case and shouldn’t be ignored.

Technical analysis

Failures to cross 100-day SMA, currently around 0.7100, push AUD/USD sellers toward attacking an upward sloping trend line from mid-June, at 0.7054 now, a break of which can recall the 0.7000 threshold on the chart.