The AUD/USD currency pair failed to stop its early-day losing streak and drew some further offers around well below the 0.7200 level, mainly due to the risk-off market sentiment. The intensification of the Sino-American tussle drove that. The American stimulus package’s ambiguity also weighed on the market trading tone, which eventually undermined the Australian dollar’s perceived risk currency and contributed to the currency pair declines.
On the other hand, the coronavirus (COVID-19) vaccine’s hopes failed to provide meaningful support to the market trading sentiment, keeping the currency pair under pressure. Apart from this, the bearish tone around the currency pair could also be associated with the broad-based U.S. dollar prevalent strength. The U.S. dollar was being supported by the market risk-off sentiment. At the moment, the AUD/USD currency pair is currently trading at 0.7179 and consolidating in the range between 0.7165 – 0.7214.
However, the market risk tone has been sluggish since the day started due to the combination of factors. Be it the U.S. lawmakers’ failure to offer any positive announcement on the coronavirus (COVID-19) relief package or the fresh escalation in the Sino-American tussle, not to forget the Brexit woes, these all factors have been pressing the market risk tone. This, in turn, underpinned the perceived risk currency Australian dollar and contributed to the currency pair declines.
At the US-China front, China recently showed his dislikes over the White House arms sale to Taiwan and the recent ban from China to use Aussie coal for power stations, which eventually offered additional pressure to the market sentiment and contributed to the currency pair losses.
Moreover, the market trading sentiment was further bolstered by the rising coronavirus cases in the U.S. and Europe, fueling worries about global economic recovery. According to the coronavirus (COVID-19) data from Germany’s Robert Koch Institute (RKI), the country’s cases rose around ~39,000 as of yesterday while the latest update today added 13 deaths more so that brings the total tally to 9,634 persons. At the U.S. front, the virus will firm its grip in the world’s largest economy, said by the U.S. health official Dr. Anthony Fauci. Hence, the pandemic fears regaining market attention and kept the investors cautious.
As in result, the broad-based U.S. dollar managed to keep its gains throughout the day as the traders still cheering the risk-off market tone, which keeps the safe-haven demand high in the market. However, the U.S. dollar gains seem rather unaffected by the U.S. political uncertainty ahead of U.S. elections. Thus, the gains in the U.S. dollar become the key factor that kept the currency pair under pressure Whereas, the U.S. Dollar Index, which tracks the greenback against a bucket of other currencies, rose by 0.11% to 93.207 by 10:04 PM ET (2:04 AM GMT).
However, the coronavirus (COVID-19) vaccine’s hopes failed to help the market sentiment on the day as the market negative headlines overshadowed the vaccine-related optimism and kept the trading sentiment negative. Anyhow, these hopes might play a key role that could help the market trading sentiment to limit the currency pair’s deeper losses.
On the contrary, the Australian dollar is a little impressed by the unexpected rise in Chinese imports last month, strengthening the domestic economy. At the data front, China’s Trade Balance for September, in Yuan terms, arrived in CNY257.68 billion against CNY416.59 billion last. Whereas, September exports arrived in +8.7% against .+11.6% last while imports came in at +11.6% vs. -1.3% expected and -0.5% prior.
Looking forward, the market traders will keep their eyes on the U.S. Consumer Price Index (CPI) data. Furthermore, the risk catalyst like geopolitics and the virus woes, not to forget the Brexit, will not lose their importance.
Daily Support and Resistance
Pivot Point 0.7157
The AUD/USD is taking a bullish turn over a support level of 0.7160 level, perhaps, to complete a 23.6% Fibonacci retracement at 0.7180 and 0.7197 level. On the higher side, AUD/USD may face the next resistance at 0.7203 level. It’s the same level where the downward trendline is likely to match and extend resistance to the AUD/USD level. Good luck!