AUD/USD ignores three-day uptrend of S&P 500 Futures to drop towards 0.7700
- AUD/USD prints mild losses as sellers attack intraday low.
- Firmer US Treasury yields help greenback to remain strong.
- Japan eyes extension of emergency, Victoria’s lockdown and US-China trade tussles act as second-tier challenges.
- US Core PCE data, inflation chatters become crucial for fresh impulse.
AUD/USD remains pressured around an intraday low of 0.7735, down 0.08% intraday amid Friday’s Asian session. The Aussie pair struggled for a clear direction the previous day as covid woes and upbeat US Treasury yields battled the broadly risk-on mood. That said, the quote’s latest declines could be traced to the cautious sentiment ahead of the US Core Personal Consumption Expenditure (PCE) Price Index for April as well as the coronavirus (COVID-19) updates.
Japan’s Economy Minister Yasutoshi Nishimura recently said, per Reuters, “Government is looking to extend the state of emergency to June 20.” The comments came amid speculations of the worsening virus conditions in Japan and the nearness to the expiry date of emergencies in nine prefectures including Tokyo.
At home, Victoria’s seven-day lockdown joins the US-China trade jitters to tame the AUD/USD bulls. Also, China’s crackdown on commodities weighs on the iron ore prices, Australia’s key export item, which in turn adds to the bearish catalysts.
Meanwhile, S&P 500 Futures seem to remember US President Joe Biden’s offer of a $6.0 trillion budget and Treasury Secretary Janet Yellen’s rejection of reflation fears. However, upbeat Treasury yields help the US dollar index (DXY) to remain firm around the weekly top, exerting downside pressure on AUD/USD. It’s worth mentioning that the US data relating to GDP, Durable Goods Orders and Weekly Jobless Claims the previous day but the DXY stepped back after rising to the one-week high.
Moving on, a lack of major data/events may keep troubling AUD/USD traders but bears can stay hopeful amid bond selling and firmer US dollar. However, the key is US Core PCE data for April which could make or break the reflation chatter.
Read: US PCE inflation preview: Gold remains key asset to watch
Technical analysis
100-day SMA near 0.7725 and a three-week-old support line near 0.7710 restrict immediate downside of AUD/USD prices while the corrective pullback won’t be taken seriously unless crossing the 0.7800 and 0.7820 resistances.
Author
Anil Panchal
FXStreet
Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.
