- AUD/USD marks fresh yearly lows despite PBOC’s inaction.
- Earlier, upbeat employment data could not lend support to the Aussie.
- Stocks are declining while bonds are rising as the risk sentiment remains off.
- Covid concerns are keeping pressure on the Australian dollar.
The AUD/USD technical and fundamental analysis reveals a strong bearish scenario as the market mode remains risk-averse and dollar strength doesn’t fall.
On Friday, the AUD/USD pair is trading at 0.7138, down 0.09%, while writing.
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On Friday in August, the NBK fixed its one-year loan principal rate (LPR) at 3.85% for the 16th consecutive month. A five-year LPR of 4.65% was also left unchanged by China’s central bank. Even with the NBK status quo, the AUD/USD seems to be heading for new multi-day lows.
Even though Australia’s employment report was better than expected, the AUD/USD fell as pandemic concerns spread. A Bloomberg poll shows employment in the US increased by 2,2 thousand people, rather than falling by 43,1 thousand people.
Statistics from the Australian Bureau of Statistics (ABS) indicate that blockages have a toxic effect. The rise in unemployment appears to be undermined by a drop in the activity. People are less likely to look for work due to a drop in participation in the labor force.
Across the board, Wall Street stocks were mixed. After two days of losses, the Dow Jones Industrial Average (DJIA) ended the week 0.19% lower. Bond traders have added to their recent winning streak by buying government bonds as well as the US dollar. Dollar-denominated commodities like gold were under pressure as the DXY dollar index rose to its highest level in a year.
With price increases possible only owing to the inflation data from Japan at the end of the week, the economic landscape for the end of the week is rather bleak.
COVID concerns in Australia
After reaching 758 daily infections on Wednesday, Australian infections on Thursday reached nearly 700 in recent time. As of today, two new infections of New Zealand Covid have been reported in Wellington. Meanwhile, there has been a multi-day death toll in the UK, and numbers are coming out of the US. Furthermore, China reported a decline in cases from 46 to 33 on Thursday.
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AUD/USD technical analysis: No respite for the bulls
The AUD/USD pair is constantly dropping, renewing the YTD lows. The pair has marked another ow at 0.7125 while the next target could be the 0.7100 mark. The Aussie has covered 52% average daily range during the Asian session, which is not a regular behavior. The volume is still pointing for further losses as the price is making lower lows, and the volume is rising. The key SMAs are too far above the price. A pullback is likely, but Greenback strength is giving no respite.
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Saqib Iqbal
