- AUD/USD seesaws near the high of Monday’s corrective recovery.
- Hopes of further money supply from the US and Europe join expectations of virus vaccine to boost market sentiment.
- Equities, commodities benefited the most whereas the US dollar is still not on the bears’ radars.
- US Presidential Election debate is the key event while Fedspeak may offer intermediate clues.
AUD/USD keeps Monday’s recovery moves while taking rounds to 0.7070 at the start of Tuesday’s Asian session. In doing so, the aussie pair respects Friday’s U-turn from the lowest in 10 weeks as the market environment benefits from the hints of further stimulus, be it monetary or fiscal, by the US and European policymakers. Also favoring the mood is Brexit-positive sentiment and hopes that the coronavirus (COVID-19) vaccine will be out soon.
Not a trend change…
Despite the AUD/USD traders’ relief from the heaviest drop in many weeks, the quote is not eligible to stand on the bull’s radars. The reason could be many starting from the broad market favor for the US dollar to the on-going COVID-19 resurgence that dampens the hope of economic recovery from the virus-led lockdowns. Also challenging the run-up could be the Reserve Bank of Australia’s (RBA) bearish bias and cause of concerns for China, Australia’s largest customer.
Even so, global markets cheered the hints of further money flow from the US and Europe. Following US House Speaker Nancy Pelosi’s optimism towards the COVID-19 aid package discussion, European Central Bank (ECB) President Christine Lagarde reiterated that the Governing Council, “continues to stand ready to adjust all of its instruments, as appropriate”. It should also be noted that expectations of China’s local press concerning no change in monetary policy and signals of manufacturing recovery also helped build the previous day’s consolidation.
Against this backdrop, Wall Street managed to keep Friday’s gains whereas the US 10-year Treasury yields also stood positive by the end of Monday. Further, Gold regained $1,880 whereas the WTI crossed $40.00.
Looking forward, the economic calendar remains mostly silent during the Asian session and hence risk catalysts are mostly in demand. It should, however, be noted that the market’s cautious sentiment ahead of the first US Presidential Election debate between the current leader Donald Trump and the challenger Joe Biden may probe the bulls going forward. Also, the Federal Reserve policymakers’ likely optimism, observed from the latest comments, can renew the US dollar buying, which in turn will question AUD/USD buyers.
Successful bounce off 100-day SMA, currently around 0.7010, needs not only the break of the 0.7100 threshold but clearance of the August 12 low surrounding 0.7110 to probe 50-day SMA level close to 0.7205. Alternatively, a downside break of 0.7010 will require validation from the 0.7000 psychological magnet before recalling the bears.
Additional important levels
|Today last price||0.7073|
|Today Daily Change||43 pips|
|Today Daily Change %||0.61%|
|Today daily open||0.703|
|Previous Daily High||0.7087|
|Previous Daily Low||0.7004|
|Previous Weekly High||0.7325|
|Previous Weekly Low||0.7004|
|Previous Monthly High||0.7416|
|Previous Monthly Low||0.7076|
|Daily Fibonacci 38.2%||0.7036|
|Daily Fibonacci 61.8%||0.7055|
|Daily Pivot Point S1||0.6994|
|Daily Pivot Point S2||0.6958|
|Daily Pivot Point S3||0.6912|
|Daily Pivot Point R1||0.7077|
|Daily Pivot Point R2||0.7123|
|Daily Pivot Point R3||0.7159|
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.