AUD/USD: Under pressure near 0.6690, multi-week low, with eyes on China open

Following the fifth week of losses, AUD/USD stays on the back foot around 0.6690 during the early Monday morning in Asia. Being the risk barometer of markets, the Aussie pair bears the burden of coronavirus fears whereas its close trade ties with China adds hardships for the currency traders. Further, the recent data has also been mixed and contributed their part to close the door for risk-on.

Read: What you need to know when markets open: Coronavirus headlines keeping markets on edge

China’s coronavirus grabs the global headlines…

Be it because of its capacity to overtake the SARS epidemic or pushing global airliners to cut connections, China’s coronavirus is all around the news. The contagion has so far taken 304 lives, affecting 14,380, as per the official records by Sunday. Not only this, it has resulted in the banning of transport and extended holidays in China to confront the threat. While recognizing the same, also because of large global push, the World Health Organization (WHO) identifies coronavirus as the global medical emergency but disappointed trade/travel bans.

Even so, global airline leaders have cut their operations to and from China while some of the key economies have arranged for special planes to recall their nationals. As per the recent update from the American Airlines Group, the operations to and from the Chinese mainland will be cut through March 27. The update also mentions a ban on foreign nationals who have traveled to mainland China within the last 14 days.

At home, January month numbers concerning Australia’s AiG Performance of Mfg Index and Commonwealth Bank Manufacturing PMI have been mixed. While the former gauge dropped to the lowest since July 2015 while flashing 45.5 against 48.3, the later managed to bounce to 49.6 from 49.1 expected and prior.

While portraying the risk-off, Australian 10-year government bond yields dropped to historical low surrounding 0.880 mark.

Moving on, more data from TD Securities Inflation and Aussie housing indicators will entertain traders ahead of China’s January month Caixin Manufacturing PMI, expected 51.3 versus 51.5 prior. However, traders will be more interested in Chinese investors’ reactions during the first day of trading after the Lunar New Year break.

Given the high risk of bloodshed selling, the Chinese government has taken various steps, ranging from banning the short-selling to announcing liquidity support, to keep the losses limited.

Technical Analysis

Unless providing a daily close below October 2019 low near 0.6670, expectations of an intermediate bounce to 0.6750 can’t be ruled out.