- AUD/USD stays subdued despite bouncing off intraday low.
- Market sentiment dwindles as vaccine optimism fails to overcome covid, tapering woes.
- DXY tracks US 10-year Treasury yields to portray a pullback.
- Light calendar, mixed concerns to challenge momentum traders during Asian session.
AUD/USD fades bounce off intraday lows, taking rounds near 0.7340, amid Friday’s Asian session. In doing so, the Aussie pair remains directionless after bears returned to the table the previous day.
Although the coronavirus woes and fears of the Fed’s tapering are the key catalysts behind the AUD/USD pair’s recent weakness, sluggish moves of the US dollar could be linked to the pair’s inactivity.
That said, the US Dollar Index (DXY) drops 0.03% to 93.00 by the press time. The greenback gauge seems to follow the US 10-year Treasury yields, down one basis point (bp) after refreshing the monthly high on Thursday.
The covid concerns remain as the major challenge for global market sentiment, not only for the AUD/USD traders. As per the latest data, infections in Queensland and Victoria stay closer to the recent highs whereas China reports 99 new cases versus 81 marked the previous day. Further, Thailand reports a daily record of 23,418 new covid cases whereas the US death toll remains near a five-month high.
Also weighing on the pair are the rising concerns over the Fed’s tapering after the latest US Producer Price Index (PPI) data for July renew reflation woes. Following this, Reuters’ poll said, “The Federal Reserve will announce a plan to taper its asset purchases in September.”
On the positive side, US President Joe Biden called on lawmakers to enact legislation aimed at lowering drug prices, including allowing Medicare to negotiate drug prices and imposing penalties on drugmakers that hike prices faster than inflation, per Reuters. Furthermore, Moderna’s study suggesting a six-month antibody versus the virus strains keeps traders hopeful.
Amid these plays, the stock futures remain mildly offered whereas stocks in Asia–Pacific trade mixed, mostly lower.
Considering the sluggish momentum and a light calendar in Asia, AUD/USD may remain pressured towards 0.7300 but inactive. However, the US Michigan Consumer Sentiment Index for August, expected to remain unchanged near 81.2, will be important to watch afterward, not to ignore the risk catalysts.
Technical analysis
AUD/USD remains vulnerable to refresh yearly low, currently around 0.7288, amid Failures to stay beyond a three-week-old ascending support line near 0.7365, not to forget the 0.7410-15 horizontal area established since early July.
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
AUD/USD consolidates in multi-day lows near 0.6350 ahead of RBA rate decision
AUD/USD is consolidating its recent losses above the mid-0.6300s during the early Asian session on Tuesday. Traders prefer to wait on the sidelines ahead of the critical Reserve Bank of Australia (RBA) interest rate decision due to be announced at 3:30 GMT.
EUR/USD languishes near YTD low, just above mid-1.0400s on bullish USD
EUR/USD refreshes YTD low on Tuesday and is pressured by a combination of factors. Bets that further ECB rate hikes may be off the table continue to undermine the Euro. The Fed’s hawkish outlook pushes the USD to an 11-month top and contributes to the fall.
Gold remains depressed near multi-month low, just above $1,820 level
Gold continues losing ground for the seventh straight day and drops to a fresh multi-month trough. Hawkish Fed expectations, elevated US bond yields and bullish USD continue to weigh on the metal. A softer risk tone fails to lend support, though oversold conditions could help limit any further losses.
Bitcoin price macro outlook remains uncertain, analyst says
Bitcoin price is still not in the clear, according to analyst and trader Rekt Capital, who explores the price action on a macro perspective. It comes after the big crypto leaped almost 5%, testing the $28,600 levels before a retraction.
RBA Decision Preview: Australian central bank expected to hold interest rate steady for fourth straight time
The Reserve Bank of Australia (RBA) is on track to keep its key interest rate unchanged for the fourth straight time on Tuesday, in a meeting that will be the first one for Michele Bullock as the new central bank Governor.