AUD/USD: Bulls and bears jostle above 0.6600 amid risk-off sentiment

While extending its pullback moves from the intraday low, AUD/USD rises to 0.6638 during Friday’s Asian session. Even so, the Aussie pair manages to flash only 0.03% gains on a day.

Although the recent news surrounding the People’s Bank of China’s (PBOC) liquidity infusion seems to have helped the Aussie pair, Beijing’s anti-dumping investigation into Australian and Japanese chemical exports cap the upside.

Earlier during the day, AUD/USD struggled to extend the previous day’s run-up amid fears of an escalation in the US-China tussle as well as downbeat statistics from Australia.

Following US President Donald Trump’s calling of China conference, the market’s risk-tone turned darker as the Republican leader has already signaled sanctions for the Asian major during the early week.

On the data front, Australia’s Private Sector Credit marked April monthly figures at 0.0% while repeating a 3.6% yearly data-point.

Having that as a background, it becomes easy to understand the recent weakness in the risk catalysts like the US 10-year Treasury yields and stocks in Australia and Japan.

Considering the lack of major economics from Australia left for publishing, investors might await the US Chicago Fed Purchasing Managers’ Index and Michigan Consumer Sentiment Index for immediate direction. Analysts at Westpac seem cautious ahead of the US data as they said, “In the US, the main market focus will be Trump’s press conference on China. On the data front, April wholesale inventories will continue to wind down as businesses brace for the demand shock. Personal income (market f/c -6.0%) and personal spending (market f/c -12.8%) will be hit hard in April, with further weakness ahead as job losses dampen activity. Having slipped into negative territory in March, the core PCE deflator is set for another weak print of -0.3%. To round out the day, the May Chicago PMI is poised for a marginal recovery (market f/c 40.0), and Fed Chair Powell will take part in a moderated virtual discussion (01:00 AEST).”

Technical analysis

Bulls keep waiting for the clear break above the 200-day SMA level of 0.6660 will provide another push towards 0.6700 round-figure. Until then, the bearish divergence on RSI will keep pushing sellers towards a nine-day-old support line at 0.6580 and 100-day SMA around 0.6485.