AUD/USD: Consolidates losses around one-week low beyond 0.7100

AUD/USD seesaws around one-week low following its bounce off 0.7134, currently at 0.7144, as Wednesday’s Asian session begins. The aussie pair closed Tuesday on a negative side while portraying a three-day losing streak as the US dollar rebound joined a crash in gold prices.

Is there a risk?

With the stabilization in coronavirus (COVID-19) cases in Victoria joining hands with the receding hospitalizations from the US, the market’s risk-tone sentiment cheered US President Donald Trump’s hint of 20% gains by the third quarter (Q3). Also underpinning the risks were the People’s Bank of China (PBOC) Governor Yi Gang’s upbeat comments concerning the phase one trade deal. The PBOC leader said, “China will continue implementing the phase-one economic and trade agreement with the United States, while measures announced to open up china's financial sector will continue.” Even so, American President Trump said yesterday that the trade deal with China means “very little” to him.

Elsewhere, hopes of the American Congress’ stimulus dimmed recently following Fox Business News (FBN) update from the US Senate Republican Leader Mitch McConnell. The House leader said, “White House coronavirus aid negotiators have not spoken to top democrats in congress today.”

Talking about the data, National Australia Bank’s (NAB) Business Confidence and Business Conditions marked mixed signals but the US Producer Price Index backed expectations that the world’s largest economy is gradually picking up the strength despite the virus woes.

Against this backdrop, US 10-year Treasury yields gained seven basis points (bps) to 0.643% while Wall Street benchmark ended Tuesday on a negative note following the last-hour selling pressure. The same portrays mixed sentiment and awaits major clues while relying on the US dollar gains and drop in commodity prices to exert downside pressure on the AUD/USD.

Moving on, traders will keep eyes on Australia’s August month Westpac Consumer Confidence and the second quarter (Q2) Wage Price Index. While the former dropped to -6.1% in the previous month, the later is expected to have receded to 0.3% from 0.5% QoQ. While the data suggests further hardships for the AUD/USD prices, recovery in the market sentiment could help the pair extend the latest pullback moves.

Technical analysis

A one-month-old support line, currently around 0.7130 restricts the pair’s immediate downside ahead of 0.7065/60 area comprising July 24 low and June 10 high. Meanwhile, buyers will have to cross 0.7200 in a bid to regain the controls.