- AUD/USD drops at the week’s start amid mixed trade/political headlines that crossed wires during the weekend.
- Chinese efforts to alter the loan pricing regime, statements on phase-one confused traders.
- Geopolitical tension in Iraq and Syria negatively affects the market’s risk tone during the year-end thin trading session.
Having been as the week’s top performer by the last week, the AUD/USD pair pulls back to 0.6976 at the start of Monday’s Asian session. The Aussie pair might have taken the weekend news from China as a reason to step further away from the key 0.7000 round-figure.
South China Morning Post (SCMP) came out with the developments on the phase-one. The Chinese news media relied on Chinese ambassador saying that there is no problem with Beijing meeting its phase one commitments, but the US must also live up to its vows on issues such as Taiwan. Earlier, the US President Donald Trump said that the two sides are nearing a phase-one signing but no timetable was announced for the same.
Elsewhere, Bloomberg news mentioned that the People’s Bank of China (PBOC) ordered financial institutions to stop using the one-year lending rate as its reference rate beginning January 1. Instead, the banks will now have to rely on Loan Prime Rate (LPR). Some consider it as a sign of an upcoming rate cut as LPR is at 4.15% compared to the old benchmark at 4.35%.
Read More: What you need to know before markets open: AUD technically precarious, fundamentals are balanced
On the geopolitical front, Reuters conveyed that the US military undertook “defensive strikes” in Iraq and Syria against the Kataib Hezbollah militia group as per the US Pentagon on Sunday. This doesn’t go well to the market’s risk sentiment amid sparse trading period during the year-end holiday mood.
The Asian markets are still less active to respond fully to the weekend headlines and await Tokyo open’s reaction. Additionally, a lack of major data/events on the economic calendar also restricts the market’s performance off-late.
Technical Analysis
The current price set-up confirms pullback from the monthly rising channel resistance, at 0.7000 now. However, bearish bias can’t be established unless breaking the channel’s support and 200-day Simple Moving Average (SMA) level surrounding 0.6900 mark.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD retreats below 1.0700 after US GDP data
EUR/USD came under modest bearish pressure and retreated below 1.0700. Although the US data showed that the economy grew at a softer pace than expected in Q1, strong inflation-related details provided a boost to the USD.
GBP/USD declines below 1.2500 as USD rebounds
GBP/USD declined below 1.2500 and erased the majority of its daily gains with the immediate reaction to the US GDP report. The US economy expanded at a softer pace than expected in Q1 but the price deflator jumped to 3.4% from 1.8%.
Gold drops below $2,320 as US yields shoot higher
Gold lost its traction and turned negative on the day below $2,320 in the American session on Thursday. The benchmark 10-year US Treasury bond yield is up more than 1% on the day above 4.7% after US GDP report, weighing on XAU/USD.
XRP extends its decline, crypto experts comment on Ripple stablecoin and benefits for XRP Ledger
Ripple extends decline to $0.52 on Thursday, wipes out weekly gains. Crypto expert asks Ripple CTO how the stablecoin will benefit the XRP Ledger and native token XRP.
After the US close, it’s the Tokyo CPI
After the US close, it’s the Tokyo CPI, a reliable indicator of the national number and then the BoJ policy announcement. Tokyo CPI ex food and energy in Japan was a rise to 2.90% in March from 2.50%.