- AUD/USD is testing the bull's commitments at trendline support.
- 38.2% Fib capping upside attempts as US dollar picks up a bid in risk-off conditions.
AUD/USD is currently trading at 0.6961 between a range of 0.6958 and 0.6964 as bears chip away at the hourly trendline support below 0.7000.
The pair lost its footing since yesterday's trade, succumbing to the coronavirus risk-off themes throughout the session overnight.
Here in Asia on Friday, bears will be keen to see a break and retest of the support line before committing to shorts below it ahead of the weekend.
As for data from overnight, the Initial claims were better than expected, falling 99k in the week ended 4 July to 1.314k vs expectations of 1.375k.
Encouragingly, continuing claims fell 700k to 18.06m suggesting return to work is continuing despite the recent rise in COVID-19 cases,
analysts at ANZ Bank explained.
Meanwhile, last week, the Australian Government announced a near AUD75bn upgrade to the defence budget over the coming decade. "The bottom line is that, as well as being an important statement on the geostrategic environment, there is conservatively AUD190bn of Defence business up for grabs between now and 2029-30," analysts at ANZ Bank explained.
Geopolitics is definitely a driver of the Aussie and trade war risk is never too far from the radar.
As for commodities, we have seen a slump in global oil prices and gold was unable to hold on to the 1800 levels with much conviction. copper prices also took a turn for the worst which have all sewed the seeds for the Aussie bears.
The day ahead
The calendar is quiet until New York's session where we will see US Retail Sales, so the prospects are purely technical moves and headlines pertaining to the spread of the virus.
For the day ahead, bulls will look for sturdy equity prices, but further tests of support likely and sustain breakout opens risk to 0.6940 and 0.6897 38.2% and 61.8% respective Fib retracements. Eyes will also remain on copper prices as gains erode while yen and greenback are bought, weighing on the near-term outlook.
AUD/USD trendline support pressured
Next week's agenda
Price action could well be confined ahead of a very busy slate next week, including June labour force, July Westpac consumer sentiment and June NAB business confidence.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD extends gains above 1.0700, focus on key US data
EUR/USD meets fresh demand and rises toward 1.0750 in the European session on Thursday. Renewed US Dollar weakness offsets the risk-off market environment, supporting the pair ahead of the key US GDP and PCE inflation data.
GBP/USD extends recovery above 1.2500, awaits US GDP data
GBP/USD is catching a fresh bid wave, rising above 1.2500 in European trading on Thursday. The US Dollar resumes its corrective downside, as traders resort to repositioning ahead of the high-impact US advance GDP data for the first quarter.
Gold price edges higher amid weaker USD and softer risk tone, focus remains on US GDP
Gold price (XAU/USD) attracts some dip-buying in the vicinity of the $2,300 mark on Thursday and for now, seems to have snapped a three-day losing streak, though the upside potential seems limited.
Injective price weakness persists despite over 5.9 million INJ tokens burned
Injective price is trading with a bearish bias, stuck in the lower section of the market range. The bearish outlook abounds despite the network's deflationary efforts to pump the price.
US Q1 GDP Preview: Economic growth set to remain firm in, albeit easing from Q4
The United States Gross Domestic Product (GDP) is seen expanding at an annualized rate of 2.5% in Q1. The current resilience of the US economy bolsters the case for a soft landing.