- AUD/USD remains under pressure as the passage of the Hong Kong bill triggers US-China trade war fears.
- Australia’s Private Capital Expenditure for Q3
- Risk events will keep the driver’s seat on the US Holiday.
AUD/USD stays on the back foot around 0.6770 as weaker than expected Aussie Capex data, fears of fresh trade war weigh on the pair during the Asian session on Thursday.
Australia’s third-quarter (Q3) Private Capital Expenditure (Capex) declined more than -0.1% forecast and -0.5% prior to -0.2%.
With the United States’ (US) President’s passage of Hong Kong Protection Bill, political relations between the US and Beijing will again be strained as China has already warned the Trump administration to not interfere in their personal issues. The bill requires the annual review of Hong Kong’s trade status and could levy sanctions on any person/institution if found guilty of human rights violations. The same gives an edge to the Hong Kong protesters over Chinese use of force.
Talks surrounding the nearness of the phase-one trade deal between the US and China, coupled with the optimism concerning the United Kingdom’s (UK) December election results, earlier favored the market’s rush towards riskier assets and propelled the US dollar.
Adding to the greenback strength were strong US data that reduced market speculations that the good time for the world’s largest economy will soon be over.
While the US Thanksgiving Day holiday and an absence of major data will affect the market’s momentum, traders will wait for China’s retaliation, as expected by the Global Times in its old story, to the US action.
Technical Analysis
Sustained trading below 61.8% Fibonacci retracement of October month upside, at 0.6770, can drag the quote further down to October 16 low of 0.6720. Alternatively, a downward sloping trend line since November 11 and 50% Fibonacci retracement can challenge the pair’s pullback around 0.6800 mark.
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