AUD/USD steps back from one week high, but stays above 0.6150 amid risk reset

• AUD/USD fails to cross the March-end top, witnessed profit-booking.
• RBA’s upbeat statement, signals for scaling back the support joined risk-on earlier.
• Updates from Japan, New York question the early hopes of receding coronavirus fears.
• Aussie housing finance data can offer intermediate direction, virus updates remain as the key.

AUD/USD extends the recent pullback from one-week high while declining to 0.6170 at the start of Wednesday’s Asian session. The pair earlier cheered broad US dollar weakness amid risk-on but failed to hold onto gains.

Early hopes faded…

While a mild weakness in the coronavirus (COVID-19) numbers from the global hotspots raised early hopes, the recent updates from New York, suggesting all-time daily high, preceded by negative signals from Japan, checked the optimists.

Globally, the number of confirmed cases surged past-1.38 million with the death toll crossing 78,000, as per the data aggregated by Johns Hopkins University. Concerning the US, there are more than 370,500 confirmed cases and more than 11,000 deaths while New York marked the highest death toll of 731.

In Japan, PM Shinzo Abe announced an emergency in seven provinces including Tokyo while touting a huge, nearly 20% of GDP, economic package to combat the disease.

The numbers from the UK followed the footsteps of New York, with a surge in the death toll to record high by 786, while figures from Spain also bucked the previous four-day losing streak in cases and death toll.

Policy measures still on the cards…

While the RBA announced no rate cut, as expected, with an upbeat tone and signals to scale back the huge stimulus if needed, which is less likely, the US policymakers recently offered hints of loans to small businesses. Also on the cards are the second round of aid packages, as suggested on Tuesday by US President Donald Trump and the House Speaker Nancy Pelosi.

Amid all this, the market’s risk-tone seems to fade the earlier strength with the Wall Street benchmarks closed in the sea of red whereas the US 10-year Treasury yields also trimming the gains to 0.726%.

Going forward, investors will pay close attention to February month Aussie Home Loans and Investment Lending for Homes, up for publishing at 00:30 and 01:30 GMT respectively, for intermediate clues. However, the broad direction will be guided by the virus updates.

Technical analysis

Despite closing beyond a 21-day SMA level of 0.6075, the quote is yet to close the March 31 high near 0.6215 that holds the key for further upside towards 0.6300 and mid-March month high near 0.6330.