Following the worst losses in a month, AUD/USD bears take a respite.
The quotation is weighed down by mixed Australian employment numbers, weak China GDP growth, and covid troubles.
Powell’s remarks, as well as US data, add to the bearish pressure.
Risk catalysts remain in the driver’s seat, as do malware updates and US consumer-centric data.
Despite a brief recovery to 0.7430 in Asia early Friday morning, the AUD/USD remains abysmal around the annual low. The risk barometer pair accurately depicts low market mood while also bearing the brunt of negative data from both home and China, the company’s main customer.
Unlike today, the week began Thursday on a lighter note as Australia’s coronavirus (COVID-19) difficulties worsened, prompting Victoria to declare a lockdown. Doubts about Fed Chair Jerome Powell’s support for cheap money policies were also a negative factor.
The virus-driven pessimism was bolstered by a dismal Australia Employment Change of +29.1K versus +30.0K expected and 115.2K before, despite an unexpected drop in Unemployment Change to 4.9 percent from 5.5 percent forecast and 5.1 percent previously. In addition, China’s Q2 GDP fell on a year-over-year basis, even as QOQ data joined monthly Retail Sales and Industrial Production in fighting the bears.
The US Philadelphia Fed Manufacturing Index and the New York Empire State Manufacturing Index, on the other hand, were mixed in July, while weekly Indian Jobless Claims were in line with expectations at 360,000.
Bears are teasing one other about the economic conditions in the United States, Australia, and China. Furthermore, Fed Chairman Powell repeated his pessimistic inclination, stating that no adjustment in monetary policy is required, although St. Louis Fed President Bullard was on the opposing side, adding to the market’s risk aversion.
The Wall Street benchmark had another lethargic day against this backdrop, with US 10-year Treasury rates falling 5.5 basis points (bps) to 1.30 percent by the end of Thursday’s North American session.
In the future, a shortage of Australian data may lead AUD/USD traders to hunt for trans-Tasman data for new Asian stimulus. Following that, the US Retail Sales and preliminary readings of the Michigan Consumer Sentiment Index, both of which are predicted to rise by 0.4 percent in June and 86.5 percent in July, will be important to monitor. Qualitative risk catalysts will be the most important to watch.
Read: June Retail Sales in the United States: A Look Ahead Examining the reactions of major pairs to prior releases
The key for sellers is a horizontal area encompassing the August-September 2020 highs and the yearly low around 0.7415-10. Meanwhile, the AUD/USD pair’s corrective downturn is being challenged by a three-week-old declining resistance line around 0.7475 and the 200-DMA level around 0.7585./n
