AUD/USD stays on the back foot as fears of global recession dominate

In a reaction to the return of global pessimism, coupled with the RBA’s rate cut, AUD/USD nears a decade low while trading around 0.6700 during early Wednesday morning in Asia.

The Aussie pair turned out to be the biggest major loser on Tuesday after a slew of downbeat activity numbers from the EU and the US joined that the Reserve Bank of Australia’s (RBA) rate cut in renewing the global slowdown fears.

With this, the Wall Street registered heavy losses while the US 10-year Treasury yields lost more than three basis points to 1.63%.

Adding to note is the absence of China, amid a set of mixed trade signals from the US, and a lack of uniformity of second-tier Australia data published so far.

While the absence of the major data during the Asian session and China’s holidays could keep driving traders to news headlines, the US economic calendar also seems to be light with the September month ADP Employment Change, expected 140K versus 195K prior, being the only one to watch. However, a speech from the Federal Reserve Bank of New York President John Williams will be closely observed to reconfirm recently dovish bias.

Technical Analysis

Multiple supports between 0.6685 and 0.6670 could entertain Aussie bears ahead of driving them to 0.6600 round-figure. Alternatively, buyers should at least wait for an upside break of 0.6740 before taking any long positions.