- AUD/USD attempts recovery from 0.7153 after flashing third consecutive day under 0.7200 mark.
- Virus vaccine/treatment optimism gained support from US COVID-19 figures.
- Sino-American tussles continue with TikTok suing Trump administration.
- No major data/events on the calendar, virus headlines, chatters over Jackson Hole Symposium will be the key.
AUD/USD waves around 0.7160 at the start of Tuesday’s Asian session. The aussie pair stayed depressed for the second day in a row the previous day as the US dollar stretched recovered moves. In doing so, the risk-barometer fails to portray upbeat market sentiment. This could be traced to a light calendar and a cautious mood ahead of the key events.
King dollar dominates…
If we are to ignore the US dollar’s latest moves, global markets have been mostly quiet with gains in equities and a bit of play at the treasuries. The same could have helped the AUD/USD price register notable gains, considering its risk allure and depleting coronavirus (COVID-19) numbers in Victoria. Though, nothing could be seen as the greenback gauge stretched Friday’s gains and kept the recent recoveries.
Although the Chicago Fed National Activity index flashed weaker than prior figures, the US dollar index (DXY) remained above 93.00 before closing around 93.30 by the end of Monday. The strength could be traced from receding new cases in Florida and no virus-led deaths in Arizona as well as the US government’s attempt to fast-track pandemic treatment. Furthermore, chatters concerning the Fed Chair Powell’s comments on Friday’s key Jackson Hole Symposium also offered a bit of help to the US currency.
Alternatively, news that TikTok sued the American policymakers over lack of opportunity to justify themselves and fight over the ban highlighted the US-China tussle but was largely ignored.
Against this backdrop, Wall Street remains on the front foot with S&P 500 and Nasdaq refreshed record highs by Monday’s close of North American session. Further, the US 10-year Treasury yields also gained 1.4 basis points (bps) to 0.654% at the same time.
Looking forward, traders will keep eyes on the news headlines amid a light calendar. In doing so, virus updates and news concerning the US, be it related to tussle with China or monetary policy or stimulus, will be the key.
Technical analysis
An ascending trend line from August 03, currently around 0.7140, challenges the bears ahead of 0.7065/60 region comprising June high and July 24 low. Meanwhile, a daily closing beyond 0.7200 will be necessary to convince buyers to attack the early-month top surrounding 0.7240.
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