AUD/USD pays a little heed to RBA’s Lowe amid cautious optimism

• AUD/USD fails to register large moves, stay on the back foot.
• Coronavirus fears remain on the cards, traders on a “wait and watch” mode ahead of the key data/events.
• RBA monetary policy statement, China trade balance, US employment data in focus for now.

AUD/USD remains under pressure while trading around 0.6730 after RBA’s Lowe’s testimony during the early Friday morning in Asia.

The RBA Governor Philip Lowe testifies before the House of Representatives’ Standing committee on Economics. While the RBA Governor’s initial comments raised fears of coronavirus, statements like “negative interest rates extraordinarily unlikely” offered peace to the Aussie buyers.

Read: Breaking: RBA's Lowe says economic growth to pick up to 2¾ per cent this year and 3 per cent over 2021

Earlier during Friday, Australia’s AiG Performance of Services Index for January month slipped below 48.7 to 47.4. The data failed to have any major impact considering the traders’ wait for the key events/data scheduled for publishing afterward.

The pair registered losses on Thursday after downbeat data from Australia failed to keep the bulls happy. Not only monthly details of December month trade balance and Retail Sales but quarterly Business Confidence from the National Australia Bank (NAB) also raised doubts about the strength of the Aussie economy.

It should also be noted that the risk-takers paused ahead of the key data/events while also fearing the widespread impacts of China’s coronavirus. Further, China’s commitment to halve tariffs on some of the US goods and upbeat data from the US seem to have played in favor of the US dollar than to boost the risk-tone. With this, the US 10-year yields registered no major moves while closing Thursday at 1.65%. However, Wall Street kept the gains with benchmarks rising to record highs.

Markets will now keep eyes on the RBA’s quarterly monetary policy statement ahead of China’s trade numbers and the US employment data for January. Westpac’s latest report sheds light on the details while saying, “China trade data for Jan is due, with consensus for exports around -4%yr, imports -6%yr and a trade surplus of $40bn. The actual number could be well wide of this, given huge seasonal factors, with lunar New Year unusually early this year and of course the coronavirus emerging over the month. In the US session, the focus will be Jan nonfarm payrolls and hourly earnings. We expect a 170k monthly gain for payrolls (consensus is 165k) after 145k in Dec and a 0.3% rise in hourly earnings in the month, 3.0%yr. While the January ADP print surprised to the upside, often it proves an inaccurate lead for the BLS release. The unemployment rate should remain at 3.5%. The Fed will release the semi-annual Monetary Report which will be presented to congress Tue/ Wed next week.”

Technical Analysis

Only if the pair manages to cross five-week-old falling trend line, at 0.6790 now, it can aim for 100-day SMA near 0.6830, else fears of its declines to October 2019 low near 0.6670 can’t be ruled out.