AUD/USD stays below 21-day EMA as sellers follow US-China jitters, PBOC rate decision

In addition to the US-China arguments over Hong Kong, sluggish AU data and PBOC’s support for easy money keep AUD/USD under pressure below 21-day EMA while flashing 0.6813 as a quote during Wednesday’s Asian session.

In a reaction to the United States (US) Senate passing the Hong Kong protest bill, Chinese Spokesman Lijian Zhao harshly turned down the Trump administration’s right to interfere in China's internal affairs. While both the countries were already struggling over phase one deal, further arguments over Hong Kong could spoil the mood among trade negotiators and dim prospects of a successful outcome. Even Hong Kong government expresses regret over the US passage of the bill.

On the economic front, Australia’s Westpac Leading Index for October came in above -0.12% (downwardly revised) prior to -0.07% but the bank terms it as “materially below trend.” Further, October month Skilled Vacancies increased downside pressure on the Aussie as the number registered consecutive 10 months of contraction to 0.9% versus -0.7% prior.

Additionally, China’s central bank, the People’s Bank of China (PBOC), cut its one-year Loan Prime Rate (LPR) to 4.15% from 4.20% prior. The PBOC also announced no change to the five-year LPR of 4.85%.

Even so, Fitch affirms China’s credit rating at A+ with a stable outlook while cutting down 2020 growth forecasts to 5.7% from 6.1% in 2019.

That said, the market’s risk-tone remains under pressure with the US 10-year Treasury yields losing nearly three basis points (bps) to 1.75% whereas S&P 500 Futures declining 0.3% to 3,110.

Although a lack of major data/events on the economic calendar could keep Aussie traders guessing, trade/political headlines will be the key for them to watch ahead of the minutes of the Federal Open Market Committee’s (FOMC) latest monetary policy meeting.

Technical Analysis

Other than the 21-day Exponential Moving Average (EMA) level of 0.6835, 100-day EMA around 0.6855 also limits pair’s run-up to 0.6900 round-figure. In doing so, 0.6800 and 0.6770 will remain present on sellers’ radar.