AUD/USD struggles near multi-week lows, just above mid-0.6700s
- AUD/USD witnesses some follow-through selling on dismal aussie capex data.
- Hong Kong tensions weighed on the risk sentiment and added to the selling bias.
- The downside is likely to remain limited amid relatively thin liquidity conditions.
The AUD/USD pair dropped to fresh six-week tops during the Asian session on Thursday, albeit now seems to have found some support ahead of mid-0.6700s.
The pair added to the overnight losses and witnessed some follow-through selling on Thursday – marking its sixth day of a negative move in the previous seven – in reaction to dismal Aussie Capex data. In fact, Australia’s Private Capital Expenditure (Capex) declined more than expected, by 0.2% in third-quarter as compared to the previous quarter's downwardly revised reading of -0.6%.
Weighed down by a combination of factors
The latest disappointment from the domestic data further reinforced prospects for additional policy easing by the Reserve Bank of Australia (RBA) and added to the already weaker sentiment surrounding the Australian dollar. The latest optimism over a possible US-China trade deal faded rather quickly after the US President Donald Trump signed two bills supporting Hong Kong’s pro-democracy demonstrators.
The move was seen as derailing recent progress in trade talks between the world's two largest economies and weighed on the global risk sentiment. The same was evident from a softer tone around equity markets and exerted some additional downward pressure on the China-proxy aussie, though a subdued US dollar price action helped limit any deeper losses, at least for the time being.
Given that the US markets will remain closed on Thursday in observance of Thanksgiving Day, the incoming trade-related headlines might continue to influence the broader market risk sentiment and produce some meaningful trading opportunities around perceived riskier currencies – including the Australian dollar.
Technical levels to watch
Author
Haresh Menghani
FXStreet
Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.
