AUD/USD remains on the back foot below 0.6500, Aussie jobs report eyed

• AUD/USD keeps the red despite the recent pullback from the four-day low.
• US President Trump likes negative rates, Fed Chair Powell poured cold water on the idea earlier.
• US-China tension intensified after Trump ordered a Federal retirement savings fund to delay diversifying into Chinese stocks.
• Australia’s April month employment data will be crucial, trade/virus headlines remain as the key driver.

AUD/USD probes the recent pullback from 0.6438 while stepping back from 0.6460, currently at 0.6453, at the start of Thursday’s Asian session. In doing so, the Aussie pair prints losses for the fourth consecutive day ahead of the key April month jobs report. The reason could be traced from the fears of a fully-fledged trade war as well as the coronavirus (COVID-19) wave 2.0.

US President Trump disagrees with Fed Chair Powell (again)…

While acknowledging his (indirect) dislike for the Fed Chair Jerome Powell, US President Donald Trump smashed the central banker’s efforts to rule out negative interest rates, at least for now.

The Federal Reserve Chairman Powell portrayed a pessimistic scenario for the economy moving forward while also showing readiness to use all tools available. However, the Fed Chair turned down the idea of negative rates as an immediate concern.

Trade wars continue…

US President Trump’s order to delay the Federal retirement savings fund’s diversification into Chinese stocks escalated the US-China tension. Following the decision to halt planned China stock investment, the dragon nation’s Foreign Ministry said, “Wanton placement of obstructions on US investors under the pretext of national security runs counter to economic law.”

Other than investment, Chinese leaders also have to worry about the US Republican’s bill into the Senate that could give powers to President Trump to levy sanctions on China if it fails to cooperate on the virus outbreak investigation.

Elsewhere, China is trying to cover-up its punishment to Australia after it banned meat imports from four Aussie processors. The move is widely seen as a reaction to the Australian PM Scott Morrison’s push for an inquiry into China’s role for virus outbreak.

At home, Australia’s Westpac Consumer Confidence for May surged from -17.7% to 16.4% whereas and the Wage Price Index flashed abnormal data for the Q1 2020.

Looking forward, the April month employment report will be the key as it portrays the actual economic inaction during the virus-led lockdown. While forecasts suggest downbeat prints with headline Unemployment Rate likely surging to 8.3% from 5.2% and a likely fall of -575K in Employment Change, any surprise figures might not refrain from challenging the three-day fall. The move could also take clues from the US dollar weakness due to the noise surrounding negative rates

Technical analysis

A confluence of a three-week-old ascending trend line and 21-day SMA around 0.6420/25 keeps the short-term declines limited, a break of which can drag the quote to the previous week’s low surrounding 0.6370. On the contrary, 100-day SMA, near 0.6525 now, followed by the monthly top close to 0.6560/65, keep the pair’s upside capped.