AUDUSD snaps three-day uptrend near 0.6500 amid covid, political woes, eyes on China/US inflation
- AUDUSD retreats from a six-week high, renews intraday low of late.
- Guangzhou locked down second district amid firmer covid counts.
- Close call in key states amplifies anxiety ahead of the US mid-term election results.
- China inflation numbers, US CPI will be crucial for clear directions, bears are likely to retake control.
AUDUSD bulls take a breather around 0.6500, snapping a three-day uptrend near the highest levels in 1.5-months. In doing so, the Aussie pair justifies its risk barometer status amid fears emanating from China’s covid conditions and the uncertainty surrounding the US mid-term elections.
With China’s Guangzhou announcing a lockdown in the second district, the coronavirus woes from Australia’s largest customer, namely China, escalate amid a lack of fresh positives. Also likely to portray the covid woes are the highest levels of virus numbers in six months, printed the previous day.
Elsewhere, the early updates from the US mid-term elections suggest a too-close call between the Republicans and Democrats and highlight the chance of Republicans winning in at least one house. The same exerts downside pressure on the previous optimism and the AUDUSD prices.
Furthermore, the uncertainty surrounding the Democratic Party’s control in both houses failed to tame the equities, as well as the bonds the previous day, which in turn favored the AUDUSD bulls the previous day. The reason could be linked to the market’s hopes of easy spending and less strong inflation due to the Republican Party’s likely victory in at least one house of decision-making.
It should be noted that the Aussie Prime Minister (PM) Anthony Albanese’s readiness to have a meeting with China President Xi Jinping joins the previous hopes of easy inflation to challenge the AUDUSD bulls of late.
Against this backdrop, Wall Street closed positive for the third consecutive day while the US 10-year Treasury yields snapped a four-day uptrend. It should be noted that the S&P 500 Futures print mild gains at the latest. However, the market’s optimism seems to fade ahead of the key China Consumer Price Index (CPI) and the Producer Price Index (PPI) for October.
Technical analysis
A convergence of the 50-DMA and a five-week-old resistance line highlights the 0.6510 as a short-term key hurdle for the AUDUSD bulls to keep the reins.
Author
Anil Panchal
FXStreet
Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.
