AUD/USD refreshes 2021 low to drop further towards 0.7100 despite PBOC inaction
- AUD/USD takes offers after PBOC status-quo, on the way to post biggest weekly loss in 11 months.
- PBOC keeps one-year and five-year LPR unchanged, as expected.
- Sluggish market sentiment, due to vaccine optimism jostling with Delta covid variant fears, challenges momentum traders.
- Qualitative factors are the key amid a light calendar going forward.
AUD/USD drops to a fresh low since November 2020, down 0.16% intraday around 0.7130, even as the People’s Bank of China (PBOC) matched wide marked forecasts to keep the benchmark rate unchanged during early Friday.
The PBOC kept its one-year Loan Prime Rate (LPR) unchanged at 3.85% for the 16th straight month at its August fixing on Friday. The Chinese central bank also left the five-year LPR untouched at 4.65%. Despite the PBOC status-quo, sour sentiment seems to drag the AUD/USD to the fresh multi-day low.
Read: PBOC 1&5 year loan prime rates left unchanged, as expected
Earlier in the day, the Reserve Bank of Australia (RBA) policymaker Christopher Kent crossed wires, via Reuters, but said nothing relating to the monetary policy. On the contary, the Australia and New Zealand Banking Group (ANZ) pushed back RBA rate hikes by six months and weighed on teh AUD/USD prices.
Talking about virus, after refreshing the record daily infections to 758 the previous day, Australian infections for Thursday eased to near 700 figures of late. However, New Zealand’s covid cases are spreading outside Auckland as Wellington marked two new daily infections today. Elsewhere, the UK reports a multi-day high death toll and the US numbers are also worrisome. Additionally, China reports the easing of cases to 33 versus 46 marked on Thursday.
However, the UK’s push for vaccinating 12–17 years old and the American rush for booster shots joins the Western leaders’ readiness to help the struggling Asia–Pacific nations with vaccines portray vaccine optimism and challenge the risk-off mood.
On Thursday, the US Dollar Index (DXY) jumped to the yearly high on downbeat market sentiment and a fourth straight weekly drop in jobless claims, to the pre-pandemic low. That said, the greenback gauge currently eases to 93.50, down 0.05% intraday.
It’s worth mentioning that the US 10-year Treasury yields and S&P 500 Futures remain pressured, down 0.11% and one basis point respectively, at the latest.
Considering a lack of major data/events, AUD/USD traders should keep their eyes on the risk catalysts for fresh impulse.
Technical analysis
A clear downside break of a four-month-old descending support line, around 0.7220, gradually directs AUD/USD bears to June 2020 peak surrounding 0.7060.
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.
