AUD/USD: Mildly offered around 0.7700 amid subdued markets
- AUD/USD remains on the back foot near one-week low.
- Risk appetite dwindles amid pre-Fed cautious, lack of catalysts.
- Off in Australia, China and a light calendar elsewhere add to the sluggish markets.
AUD/USD regains the 0.7700 threshold, following a drop to the intraday low of 0.7692, amid a lackluster trading session on Monday. While an extended weekend in Australia and China restricts market moves, a light calendar and thin news feed keep the pair tight-lipped of late. Even so, mildly bid S&P 500 Futures restrict the Aussie pair’s downside amid a quiet session.
Headlines suggesting the Australian drive to sign fresh trade deals with the UK, as well as firming up ties with Japan and Germany by agreeing on lower-emission technology usage add barriers to the Aussie pair’s short-term downside. Further, the Group of Seven (G7) leaders’ agreement over pushing covid vaccines and keep relief packages flowing limit the quote’s declines.
On the contrary, the US dollar index (DXY) remains firm, up 0.07% around 90.55, by the press time as market players prefer greenback uncertain times like this. The latest blow to market sentiment could be traced from the strong US data challenging the Fed policymakers ahead of this week’s Federal Open Market Committee (FOMC) as well as the G7 verdicts against China, mainly related to the covid origin and Xinjiang issue.
Meanwhile, the receding coronavirus (COVID-19) woes in Australia also back the AUD/USD buyers to battle the firmer US dollar. “Victorian authorities have said they expect Victoria will be in a position to lift COVID-19 restrictions later in the week, in the wake of one new local case being recorded,” said ABC News.
Against this backdrop, the US 10-year Treasury yields seesaw around 1.46% whereas the Asia-Pacific stocks remain subdued.
Moving on chatters over US President Joe Biden’s infrastructure spending plan may offer intermediate clues, as well as the American traders’ reaction to the G7 developments, amid an expected pre-Fed trading lull.
Technical analysis
An impending bearish cross-over of the 50-day SMA to 21-day SMA keeps AUD/USD sellers hopeful. However, an ascending trend line from April 01, close to 0.7660, becomes the tough nut to crack for the bears.
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.
