- AUD/USD extends the previous day’s losses amid risk-off sentiment.
- Oil slump occupies the front row whereas the surge in the US cases also favors the cautious sentiment.
- RBA minutes will be followed for clues relating to bond purchase tapering.
- RBA Governor Philip Lowe will present a speech titled “Economic and Financial Update”.
AUD/USD stretches the previous day’s losses to 0.6335 amid the early Tuesday morning in Asia. The Aussie pair bears the burden of broad risk aversion wave, amid a slump in oil price, while also portraying the coronavirus (COVID-19) fears. The pair traders are now waiting for the RBA minutes, followed by the RBA Governor Lowe’s speech, for fresh impetus.
Risk-off sentiment prevails…
Be it the surge in the US virus-led death toll to over 40,000 or the slump in the oil prices, risk aversion managed to prove its presence on Monday.
In doing so, the Aussie pair failed to cheer the People’s Bank of China’s (PBOC) rate cut while also paying a little heed at the recovery in virus-led fatalities at home.
While portraying the risk-off, the US 10-year Treasury yields dropped four basis points (bps) to 0.616% whereas Wall Street marked losses.
Although the RBA minutes and a speech from the RBA Governor Lowe become the key drivers for the pair, US President Trump’s coronavirus taskforce briefings will also be the key. The reason is that the Republican leader said that the house is near to another aid package for small business and the details will be rolled out on Monday. However, nothing has so far crossed the wires and hence President Trump might offer any signals for the same.
Considering the RBA minutes, the April meeting triggered the hope of scaling back the bond purchase and hence the statement will be closely watched for any clues concerning the same. Also, the RBA Governor’s speech is likely to offer hints of the current economic conditions and might avoid being too pessimistic.
As a result, the Aussie pair is likely to witness a pullback in the post-event time, if everything goes as per market expectations. However, the pandemic updates can open any wild cards and rattle the moves.
Technical analysis
A four-week-old rising trend line around 0.6305 acts as the immediate key support for the pair, break of which could recall the March-end high near 0.6200. Meanwhile, buyers are less likely to enter unless witness a fresh monthly high past-0.6445.
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