- AUD/USD sinks below the 0.72 level on USD strength.
- A rebound in the greenback could be in the making from support.
- Stimulus and vaccine hopes have been diluted in recent trade.
AUD/USD has been pressured in the Tokyo open, falling from the 0.7210 highs to a low of 0.7178.
The US dollar is catching a bid on Asia, rising some 0.1% and taking down a vulnerable Aussie following the Chinese ban of Australian coal.
There is still some doubts as to whether this is going to come to fruition, according to Australia as Trade Minister Simon Birmingham.
Birmingham said, “we do not have proof that this is occurring” during an interview with Sky News. He has said the Government is aware of the reports and was discussing the issue with the industry.
The timeline for restrictions is unclear at this stage, and this isn’t the first time in 2020 that reports of Chinese restrictions on Australian coal have featured in a similar unconfirmed way.
DXY bulls eye break of 93.25
Meanwhile, Reuters report that Johnson & Johnson have paused its COVID-19 vaccine trial due to a participant with an unexplained illness, a development that can be attributed to risk-off flows in Tokyo supporting the greenback.
The USD has underperformed against the backdrop of stronger equities of late, but there are growing uncertainties that could play into the hands of the greenback.
Risks are growing that renewed stimulus measures may arrive too late to avoid a marked deterioration in activity, and thus the greenback may otherwise find support again.
''We are of the view that risks associated with covid-19, US-China tensions and the possibility of a contested US election are significant enough for the safe-haven USD to be boosted by short-covering in the coming months,'' analysts at Rabobank explained.
The DXY is consolidating at support and this could be the makings of a significant correction. 93.25 is a key resistance.
Meanwhile, we have China’s September month Trade Balance slated as the next risk event on the economic calendar.
Forecasts suggest that the headline Trade Balance will expand from $58.9B to $59.9B in the stated month.
AUD/USD levels
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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD retreats toward 1.0850 on modest USD recovery
EUR/USD stays under modest bearish pressure and trades in negative territory at around 1.0850 after closing modestly lower on Thursday. In the absence of macroeconomic data releases, investors will continue to pay close attention to comments from Federal Reserve officials.
GBP/USD holds above 1.2650 following earlier decline
GBP/USD edges higher after falling to a daily low below 1.2650 in the European session on Friday. The US Dollar holds its ground following the selloff seen after April inflation data and makes it difficult for the pair to extend its rebound. Fed policymakers are scheduled to speak later in the day.
Gold climbs to multi-week highs above $2,400
Gold gathered bullish momentum and touched its highest level in nearly a month above $2,400. Although the benchmark 10-year US yield holds steady at around 4.4%, the cautious market stance supports XAU/USD heading into the weekend.
Chainlink social dominance hits six-month peak as LINK extends gains
-637336005550289133_XtraSmall.jpg)
Chainlink (LINK) social dominance increased sharply on Friday, exceeding levels seen in the past six months, along with the token’s price rally that started on Wednesday.
Week ahead: Flash PMIs, UK and Japan CPIs in focus – RBNZ to hold rates
After cool US CPI, attention shifts to UK and Japanese inflation. Flash PMIs will be watched too amid signs of a rebound in Europe. Fed to stay in the spotlight as plethora of speakers, minutes on tap.