AUD/USD: Pressured above 0.6800, eyes RBA’s Lowe’s speech

AUD/USD seesaws near 0.6820, the lowest since June 15, at the start of the week’s trading in Asia. The pair portrayed a gap-down opening while drifting lower to 0.6812 from Friday’s close near 0.6835. However, the pullback from the bottom of 0.6811 took it to a peak of 0.6823 from where the quote seems to consolidate at present.

Risk-aversion dominates…

Be it the fears of the second wave of the coronavirus (COVID-19) or the Sino-American tension, not to forget downbeat economics, global markets remain jittery off-late. As a result, the barometer of the market’s optimism, AUD/USD pair, remains pressured off-late.

Although China keeps repeating that the virus situation in Beijing is under control now, the same isn’t true for the US where southern states are reporting fresh spikes in the cases. Recently, Florida marked a 3.7% rise in numbers compared to the previous seven-day’s average increase of 3.5%. Elsewhere, figures in Texas, California and Oklahoma are also surging and creating a threat of the second wave. The same risk was recently pointed out by the White House Adviser Peter Navaro.

On the other hand, the US and Chinese officials remain at the loggerheads. Over the weekend, China suspended imports of the US poultry company Tyson citing the outbreak of the pandemic in the production area. The US policymakers also played their part as the Department of State said that the Secretary of State Mike Pompeo discusses steps that the US and its allies are taking to counter the Chinese communist party's challenge to democracies around the world.

Amid all these fears the US 10-year Treasury yields remained pressured below 0.70% whereas Wall Street benchmarks also marked losses by the end of the last week.

Traders may now keep eyes on the speech by the RBA Governor Philip Lowe, at 23:00 GMT for immediate direction. The central banker is scheduled to speak of the “Global Economy and COVID” at the ANU Crawford Leadership Forum. Although the RBA has recently shown readiness to act, if needed, Lowe’s comments matter a lot for near-term signals. The policymaker last praised the central bank’s efforts to combat the pandemic.

Other than Mr. Lowe’s speech, interest rate decisions by the People’s Bank of China (PBOC) will also be the key. The Chinese central bank has already cut the 14-day reverse repo in a surprise move during the last week and might not refrain from altering the benchmark interest rate from 3.85% at 01:30 AM GMT.

Should the RBA leader manage to strike an upbeat tone, coupled with PBOC’s no rate change, the AUD/USD might keep 0.6800 threshold.

Technical analysis

The pair’s break of 21-day SMA, currently near 0.6835, seem to drag it towards the last week’s low near 0.6775. However, 200-day SMA surrounding 0.6665 might challenge the bears afterward.