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AUD/USD: Bears reclaim controls above 0.7300 on coronavirus, inflation concerns

  • AUD/USD renews downside bias towards yearly low after reversing the previous two-day gains.
  • Local lockdowns in Australia extend, Nikkei hints at five years of activity restrictions based on vaccination status.
  • US PPI, Fedspeak give fresh life to tapering concerns, mild optimism for vaccine, US-China bond fails to please the bulls.
  • No major data ahead of US Michigan Consumer Sentiment Index eyed, risk catalysts are the key.

AUD/USD stays pressured around 0.7335-40, after reversing the previous two-day recovery, as Asian traders begin Friday’s task. The Aussie bears returned to the table amid fresh chatters over the US Fed’s tapering while the coronavirus concerns add strength to the downside bias. In doing so, the quote ignores slightly positive catalysts relating to the Sino-American headlines and vaccine optimism.

The US Producer Price Index (PPI) data for July renews reflation fears, which in turn solidify the Fed policymakers’ latest push for tapering. The latest PPI readings rose past market consensus in all categories while printing 1.0% figures for the heading figures and Core statistics on the MoM basis. On the contrary, Australia’s Consumer Inflation Expectations eased below 3.7% prior and 3.8% forecast to 3.3% for August.

Thursday’s comments from the Federal Reserve Bank of San Francisco President Mary C. Daly who said, per the Financial Times, “Tapering of asset purchases could start as soon as this year,” were the latest bold push to the monetary policy adjustments. Previously, Kansas City Fed President Esther George, Dallas Fed President Robert Kaplan and Richmond Fed President Thomas Barkin teased policy hawks.

Elsewhere, Australian Capital Territory (ACT) has gone into a seven-day lockdown the previous day and kept the covid woes on the table even as a jump in the New South Wales’ jabbing and a slightly easy national count battled the virus fears. It’s worth observing that Nikkei came out with the news suggesting around five years for Australia before fully opening up borders, based on the current vaccination rate and target of 80% prior to welcoming the total unlock.

It should be noted, however, that comments from Moderna suggesting their vaccine’s capacity to generate antibodies against COVID-19 variants for six months challenge AUD/USD sellers. Also on the positive side was the news that the US is committed to talks with China, per State Department Secretary Wendy Sherman’s statement to the Chinese ambassador.

Amid these plays, Wall Street benchmarks managed to print mild gains and the US 10-year Treasury yields rose two basis points (bps) to underpin the US Dollar Index (DXY).

Given the lack of major data/events in Asia, the recent tapering chatters and vaccine news may entertain AUD/USD traders ahead of the preliminary readings of the US Michigan Consumer Sentiment Index for August, expected to remain unchanged near 81.2.

Read: US Michigan Consumer Sentiment August Preview: Payrolls, inflation and the pandemic

Technical analysis

Failures to stay beyond a three-week-old ascending support line near 0.7365, not to forget the 0.7410-15 horizontal area established since early July, AUD/USD remains vulnerable to refresh the yearly low below the 0.7288 level.

Additional important levels

Overview
Today last price0.7341
Today Daily Change-0.0032
Today Daily Change %-0.43%
Today daily open0.7373
 
Trends
Daily SMA200.7371
Daily SMA500.7496
Daily SMA1000.7607
Daily SMA2000.761
 
Levels
Previous Daily High0.739
Previous Daily Low0.7322
Previous Weekly High0.7427
Previous Weekly Low0.7328
Previous Monthly High0.7599
Previous Monthly Low0.7288
Daily Fibonacci 38.2%0.7364
Daily Fibonacci 61.8%0.7348
Daily Pivot Point S10.7334
Daily Pivot Point S20.7295
Daily Pivot Point S30.7267
Daily Pivot Point R10.7401
Daily Pivot Point R20.7429
Daily Pivot Point R30.7468

Author

Anil Panchal

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.

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