- AUD/USD seeks clear direction around yearly low after a quiet start to the week.
- Covid concerns remain elevated in Australia with highest counts since early September.
- Aussie authorities ready more stimulus as virus outbreaks hint at extended local lockdowns.
- PM Morrison’s speech, China trade figures for June and US CPI will be the key.
AUD/USD seesaws around 0.7480, following a quiet week-start around yearly low, during early Tuesday morning in Asia. The pair fails to cheer fresh record tops in equities amid the coronavirus (COVID-19) at home and a lack of major catalysts, which in turn highlights today’s China trade numbers and US Consumer Price Index (CPI) for fresh impulse.
Further lockdowns…
With the highest new confirmed cases in over 10 months, around 120 per ABC News, Australia’s covid-led activity restrictions are likely to be stretched. Conditions in the New South Wales (NSW) become worrisome, pushing PM Scott Morrison, NSW Premier Gladys Berejiklian and other policymakers towards an aid package discussion overnight.
US looks to cautiously easing the virus-led activity restrictions while authorities from the UK confirm July 19 unlock even as virus cases jump of late.
Alternatively, New York Federal Reserve President John Williams said, per Reuters, “The US economy has not achieved the 'substantial further progress' set by the US Federal Reserve to start reducing asset purchases.” His comments solidify the hopes of extended easy money and favored equities.
Against this backdrop, earnings optimism favored US equity benchmarks to refresh record tops whereas the US Treasury yields also added 1.2 basis points (bps) by the end of Monday’s North American session.
Moving on, National Australia Bank’s (NAB) Business Confidence and Business Conditions figures for June, coupled with China’s Trade Balance, Imports and Exports for the said month will be the key data in Asia, followed by the US CPI for the last month. While NAB data may print mixed results, likely weakness in Chinese trade numbers, coupled with the COVID-19) woes may continue weighing on the AUD/USD prices. Though, the expected announcement of fiscal stimulus for NSW may offer an intermediate bounce to the pair.
Technical analysis
AUD/USD remains below a 12-day-old resistance line, near 0.7505, despite bouncing off August-September tops during late last week, around 0.7415. It should, however, be noted that the MACD line teases short-term bulls and hence an upside clearance of 0.7505 could trigger corrective pullback towards 200-DMA level of 0.7581.
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