- AUD/USD braces for the most significant daily loss in six weeks amid multiple negatives.
- Australia’s Retail Sales marked the first contraction of 2022, RBA Governor Lowe cites housing market fears.
- China’s virus conditions worsen, but protestors demand the scrapping of the Zero-Covid policy.
- Qualitative catalysts will be more critical for fresh directions.
AUD/USD justifies its risk-barometer status as it slumps to 0.6680 early Monday, marking more than 1.0% daily loss amid the sour sentiment. In addition to the risk-off mood, downbeat data from Australia and the grim comments from Reserve Bank of Australia (RBA) Governor Philip Lowe also favor the Aussie pair’s sellers.
Markets in China are down nearly 3.0% as the Coronavirus fears escalate in the dragon nation amid record-high daily infections and protests over the government’s Zero-Covid policy. The reason could be linked to the alleged fire that killed around ten people in Shanghai as they couldn’t leave the building because it was partially locked down, per the rumors spread on the internet.
Elsewhere, Australia’s Retail Sales marked a negative growth of 0.2% MoM for October versus the 0.4% expected expansion and 0.6% previous increase. “Australian retail sales suffered their first fall of 2022 in October as rising prices and higher interest rates finally seemed to have an impact on spending power, a surprisingly soft result that supports a slower pace of rate hikes,” mentioned Reuters after the downbeat Aussie data.
It’s worth noting that RBA Governor Lowe cited the wage-spiral risks and the housing market fears to exert more downside pressure on the AUD/USD prices.
While portraying the mood, the US stock futures dropped nearly 0.70% while the US 10-year Treasury yields fell 3.7 basis points (bps) to 3.66% by the press time.
Given the risk-off mood and grim catalysts from Australia, AUD/USD is likely to witness further downside ahead of the nation’s recently initiated monthly inflation data, up for publishing on Wednesday. Following that, Thursday’s comments from RBA Governor Philip Lowe and Fed Chair Jerome Powell, as well as Friday’s US employment report for November, will be crucial to watch for precise directions.
Technical analysis
A daily closing below the 0.6690 support confluence, including the 100-DMA and a three-week-old ascending trend line, becomes necessary to recall the AUD/USD bears.
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