AUD/USD consolidates near 4-week low, RBA’s Debelle, trade headlines in the spotlight

  • AUD/USD takes rounds to mid-October lows after being disappointed by the economic calendar the previous day.
  • Trade headlines have recently been positive from the US side, China holds its head high.
  • Market sentiment recovers ahead of a light economic calendar.

Given the recent trade positive headlines form the US, AUD/USD stops further declines below the four-week low while taking rounds to 0.6785 during early Friday morning in Asia.

Be it the US Department of Agriculture’s Under Secretary Ted McKinney or the Politico’s news, trade optimism crossed wires from the United States (US) off-late. The same offers recovery in the market’s risk sentiment with S&P 500 Futures staying mildly positive with 0.10% gains.

The Aussie pair dropped to the lowest since October 17 the previous day after Australia’s employment data and China’s Industrial Production/Retail Sales increased risk of the Reserve Bank of Australia’s (RBA) further rate cuts in 2020. Disagreements between the US and Chinese trade negotiators as well as tension surrounding Hong Kong and Taiwan kept the risk-tone under pressure on Thursday.

Also, the Fedspeak failed to provide any clear direction of the next policy move as Chairman Powel blamed trade war for manufacturing weakness while some others at the Fed seem undecided on the need/space for more stimulus. Though, all of them were united on praising the current monetary policy.

As a result, the US 10-year Treasury yields slipped nearly seven basis points (bps) to 1.82% while Wall Street stays sluggish with major indices marking no more than 0.10% moves.

Markets are now gearing up for RBA Deputy Governor Guy Debelle’s speech about mortgage arrears at a panel discussion hosted in Sydney. It should also be noted that a lack of major data/events keep investor focus on trade/political headlines for fresh direction.

Technical Analysis

Pair’s break of an upward sloping trend line since October start indicates further weakness towards 0.6700 round-figure unless prices recover back beyond 100-day Exponential Moving Average (EMA) level of 0.6855.

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