AUD/USD slides 40 pips as AUD/JPY drops, risk off

  • AUD/USD: besides poor economic data, Aussie heads lower.
  • AUD/USD: dragged by risk-off, AUD/JPY sharp drop to 21-D SMA support.

AUD/USD is sliding as the risk off sentiment picks up with AUD/JPY falling heavily to 83.47, just below the 21-D SMA, and is dragging the major commodity currency below the 10, 50 and 21-hr SMAs.  Currently, AUD/USD is trading at 0.7870, up 0.14% on the day, having posted a daily high at 0.7918 and low at 0.7851.

AUD/USD trades heavy as we get going through the NY session, mostly due to a decline in the stock markets where political angst on both a domestic and geopolitical front is weighing on the outlook for growth in the US and highlights uncertainties ahead. 

US economy well below 3% GDP target 

The GDPNow model estimate below now 2%

There have been recent headlines that the White House is looking for a $100 Billion deficit reduction with China, as reported in the Dow Jones and seeks to implement tariffs of $60B of goods from China. Investors fear a retaliation from China and shares of Boeing are already down -3.98% on the back of such concerns. At the same time, there have been a couple of downgrades in the outlook for the US Q1 GDP numbers with  Goldman Sachs coming in with an estimate now down to 2% from 2.5% and the Atlanta Fed dropping from Friday's 2.5% to 1.9%. This comes after further disappointing data where retail sales missed estimates by 0.2%.

AUD/USD levels

The price remains above the 10, 200 and 21-D SMA's (support 0.7830/50) but back below the  50-D SMA at 0.7896. Daily closes on the 0.79 handle will open risk to 0.8124/62 (the September 2017 high, the May 2015 high and long-term 50% Fibonacci retracement of the move down from 2014) is the next hurdle. However, a break below the 200-D SMA at 0.7800 could ignite a drop to 0.7712.

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