On Thursday, COVID-19 worries and a weaker Chinese GDP print sparked some selling in the AUD/USD pair.
A tame USD helped limit any further losses ahead of US data and Powell’s speech.
During the first half of the European session, the AUD/USD pair maintained its offered tone and was last seen languishing about 0.7465, only a few pips above daily lows.
The pair failed to profit on the previous day’s gains, instead encountering new supply on Thursday and being pushed by a number of factors. Following a spike in COVID-19 infections, the Australian state of Victoria was forced into a five-day lockdown on Thursday, which worked as a headwind for the AUD/USD pair.
Aside from fears about the extremely contagious Delta strain of the coronavirus spreading, the China-proxy aussie has been under pressure due to a slowing in Chinese economic development. In actuality, China’s annualized GDP growth in the second quarter of 2021 was 7.9%, compared to consensus projections of 8.1 percent and 18.3 percent in the preceding quarter.
A softer tone surrounding the US dollar, which was considered as the only factor offering some support to the AUD/USD pair, more than outweighed the negative aspects. A continuation of the previous day’s dramatic drop in US Treasury bond yields, as well as Fed Chair Jerome Powell’s dovish statement, weighed on the greenback.
Powell maintained during his semi-annual congressional hearing that the inflation rise was only transitory. His comments overshadowed last week’s inflation data, which showed that US producer prices rose at their fastest rate in nearly 11 years in June, while consumer prices rose to their highest level in more than 13 years.
In the grand scheme of things, the AUD/USD pair has been swinging in a small zone over the past week or so. The price movement is range-bound, forming a rectangle that might be classified as a bearish consolidation phase before the next leg down. The technical setup favors a further decline in the near term.
Market players are currently anticipating the publication of the US economic calendar, which includes the typical Initial Weekly Jobless Claims and Philly Fed Manufacturing Index. This, combined with US bond yields and Powell’s second day of congressional testimony, will have an impact on USD price dynamics and create some short-term trading possibilities around the AUD/USD pair./n
