- AUD/USD fails to cheer better than forecast activity numbers from home and China.
- Globally rising coronavirus cases, extended lockdowns in Europe and grim words from key policymakers favor risk-off.
- A light economic calendar in Asia keeps virus updates in the spotlight.
AUD/USD drops to 0.6065 while extending the previous two-day losing streak at the start of Thursday’s Asian session. In doing so, the Aussie pays a little heed to the recent PMI numbers from home and China while relying more on the better than forecast numbers from the US as the coronavirus (COVID-19) crisis continues.
Coronavirus keeps traders on their toes…
Be it the early Wednesday's comments from US President Donald Trump or the latest pessimistic signs by the World Health Organization (WHO) official, a slew of grim words due to the virus continued to dent the trade sentiment. Also increasing the strength of the downbeat lines was extended lockdowns in Germany and Italy as well as surging numbers across the globe.
While portraying the risk-off, the US 10-year treasury yields drop nine basis points (bps) to 0.602% whereas Wall Street benchmarks dropped more than 4.0% each by their daily trading close on Wednesday.
Recently, the US Federal Reserve (Fed) took another step to combat the deadly disease via temporary easing for big banks. The Fed eased requirements to calculate supplementary leverage ratio that would exclude the US Treasury securities and deposits at Federal Reserve Banks from the calculation and will be in effect until March 31, 2021.
On the data front, US AiG Performance of Manufacturing Index and China’s Caixin Manufacturing PMI both marked upbeat figures whereas US activity numbers came in softer. However, better than forecast -150K ADP Employment Change to -27K, mainly due to the period of the survey that closed before the actual virus crisis, helped the US dollar to extend its broad strength.
Given the lack of major data/events on the Asian calendar, not to forget the market’s focus on the pandemic, qualitative catalysts are likely to be in the spotlight.
Technical analysis
Sustained trading below 21-day SMA, currently at 0.6175, keeps the pair pushed towards a 10-day SMA level of 0.5985.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD rises to two-day high ahead of Aussie CPI
The Aussie Dollar recorded back-to-back positive days against the US Dollar and climbed more than 0.59% on Tuesday, as the US April S&P PMIs were weaker than expected. That spurred speculations that the Federal Reserve could put rate cuts back on the table. The AUD/USD trades at 0.6488 as Wednesday’s Asian session begins.
EUR/USD holds above 1.0700 on weaker US Dollar, upbeat Eurozone PMI
EUR/USD holds above the 1.0700 psychological barrier during the early Asian session on Wednesday. The weaker-than-expected US PMI data for April drags the Greenback lower and creates a tailwind for the pair.
Gold price cautious despite weaker US Dollar and falling US yields
Gold retreats modestly after failing to sustain gains despite fall in US Treasury yields, weaker US Dollar. XAU/USD struggles to capitalize following release of weaker-than-expected S&P Global PMIs, fueling speculation about potential Fed rate cuts.
Ethereum ETF issuers not giving up fight, expert says as Grayscale files S3 prospectus
Ethereum exchange-traded funds theme gained steam after the landmark approval of multiple BTC ETFs in January. However, the campaign for approval of this investment alternative continues, with evidence of ongoing back and forth between prospective issuers and the US SEC.
Australia CPI Preview: Inflation set to remain above target as hopes of early interest-rate cuts fade
An Australian inflation update takes the spotlight this week ahead of critical United States macroeconomic data. The Australian Bureau of Statistics will release two different inflation gauges on Wednesday.