AUD/USD remains firm below 0.6400 with eyes on China trade data

Despite stepping back from the month high of 0.6410 during the late-US session on Monday, the AUD/USD remains firm around 0.6385 at the start of Tuesday’s Asian session. Even if Easter Monday limited the pair’s moves, broad US dollar weakness propelled the pair off-late.

With a slew of mixed comments from the US Federal Reserve policymakers, the US dollar registered heavy downside on Monday. The run of negative signals began with the Minneapolis Federal Reserve Bank President Neel Kashkari who said that the US economy faces 'long, hard road' to recover from coronavirus. On the contrary, Atlanta Fed President Raphael Bostic and Federal Reserve Vice Chairman Richard Clarida flashed positive signals.

Also contributing to the US dollar weakness could be the warning from the World Health Organization (WHO) that the control measures must be lifted slowly. The US is among the frontrunner, as repeatedly suggested by President Donald Trump, to gradually restore the economy cycle and such pessimistic comments could negatively affect the odds to restart the world’s largest economy.

It should also be noted that the coronavirus (COVID-19) data from the US has been murky off-late, making the Republican-led economy to be the global hot-spot with over 20,000 deaths and more than 530,000 infections.

Also weighing on the greenback could be the New York Fed’s statement that it will reduce the frequency of some repo operations.

Amid all these, the global financial markets turned risk-averse with Wall Street reversing most of Friday’s gains.

Moving on, March month Business Confidence and Business Conditions from the National Australia Bank (NAB), around 01:30 GMT, will be the immediate catalysts for the Aussie pair ahead of China’s trade figures. While the NAB figures are likely to pull back from the previously downbeat outcomes, an expected recovery in Chinese figures might help the quote to extend its latest run-up. Concerning China’s data, analysts at the Australia and New Zealand Banking Group said, “China’s trade data for March should show things gradually returning to the new normal. China’s main trade issue is no longer virus-related logistics tangles but rather a massive demand shock, with its major export markets in lockdown and heading into simultaneous recessions.”

Technical analysis

The pair needs to provide a clear break above 50-day SMA level of 0.6375 to aim for February month low near 0.6425, until then chances of its pullback to the monthly rising trend line near 0.6235 can’t be ruled out.