- AUD/USD bears take a breather following the heaviest losses in a month.
- Mixed Aussie employment figures, sluggish China GDP growth and covid woes weigh on the quote.
- Powell’s testimony, US data exert additional downside pressure.
- Risk catalysts stay on the driver’s seat, virus updates, US consumer-centric figures also important.
AUD/USD remains dismal around the yearly low, despite a recent uptick to 0.7430, amid the early Friday morning in Asia. The risk barometer pair aptly portrays subdued market sentiment while also bearing the burden of downbeat data at home, as well as from the largest customer China.
Unlike today, the quote began Thursday on a softer footing as the coronavirus (COVID-19) woes escalated in Australia, pushing Victoria for a lockdown. Also on the negative side were the doubts over Fed Chair Jerome Powell’s support for easy money policies.
The virus-led pessimism got extra support from downbeat Australia Employment Change, +29.1K versus +30.0K expected and 115.2K prior, ignoring the surprise downtick in Unemployment Change to 4.9% from 5.5% forecast and 5.1% previous readouts. Additionally, China’s Q2 GDP eased on YoY even as QOQ figures joined monthly Retail Sales and Industrial Production to battle the bears.
On the other hand, US Philadelphia Fed Manufacturing Index and New York Empire State Manufacturing Index also came in mixed for July whereas the weekly Indian Jobless Claims matched 360K forecasts.
Confusion over the economic conditions of the US, Australia and China teases bears. Further, Fed’s Powell reiterated his bearish bias support no change in monetary policy required whereas St. Louis Fed President Bullard occupied the other side and added to the market’s risk-off mood.
Against this backdrop, the Wall Street benchmark marked another sluggish day and the US 10-year Treasury yields dropped 5.5 basis points (bps) to 1.30% by the end of Thursday’s North American session.
Looking forward, a lack of Aussie data may push AUD/USD traders to look for trans-Tasman figures for fresh impulse in Asia. However, the US Retail Sales and the preliminary readings of the Michigan Consumer Sentiment Index, expected 0.4% for June and 86.5 for July respectively, will be important to watch afterward. Above all, qualitative risk catalysts will be crucial to observe.
Read: US June Retail Sales Preview: Analyzing major pairs' reaction to previous releases
Technical analysis
A horizontal area comprising August–September 2020 highs and the yearly low around 0.7415-10 becomes the key for sellers. Meanwhile, a three-week-old descending resistance line around 0.7475 and 200-DMA level surrounding 0.7585 challenge the AUD/USD pair’s corrective pullback.
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 stays weak near 1.0650 ahead of Eurozone PMI data
EUR/USD remains on the back foot near 1.0650 in European trading on Tuesday. Resurgent US Dollar demand amid a cautious risk tone weighs on the pair. Investors stay wary ahead of the preliminary Eurozone and US business PMI data.
GBP/USD eases below 1.2350, UK PMIs eyed
GBP/USD is dropping below 1.2350 in the European session, as the US Dollar sees fresh buying interest on tepid risk sentiment. The further downside in the pair could remain capped, as traders await the UK PMI reports for fresh trading impetus.
Gold price flirts with $2,300 amid receding safe-haven demand, reduced Fed rate cut bets
Gold price (XAU/USD) remains under heavy selling pressure for the second straight day on Tuesday and languishes near its lowest level in over two weeks, around the $2,300 mark heading into the European session.
PENDLE price soars 10% after Arthur Hayes’ optimism on Pendle derivative exchange
Pendle is among the top performers in the cryptocurrency market today, posting double-digit gains. Its peers in the altcoin space are not as forthcoming even as the market enjoys bullish sentiment inspired by Bitcoin price.
Focus on April PMIs today
In the euro area, focus today will be on the euro area PMIs for April. The previous months' PMIs have shown a return of the two-speed economy with the service sector in expansionary territory and manufacturing sector stuck in contraction.