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  • AUD/USD fails to holds onto recovery gains.
  • Coronavirus updates renew the US dollar buying amid fears of widespread contagion.
  • PBOC rate decision can offer intermediate moves, Remdesivir, COVID-19 will keep the driver’s seat.

AUD/USD extends the pullback from 0.5900 while declining to 0.5725 at the start of Friday’s Asian session. While efforts from the US Fed to shore the US dollar supplies dragged the greenback earlier, fresh coronavirus (COVID-19) updates help it regain the strength.

Global central banks continue to fight against COVID-19…

Be it the RBA, ECB, BOJ or the Fed, not to forget the BOE and Asian banks, all at the helm keep pumping their respective monetary system and or avail swaps to fight against the deadly virus.

The RBA’s 25 basis points (bps) rate cut and a QE seemed to have escalated the market’s worries the previous day. “The RBA cut the cash rate 0.25% yesterday and announced that they would target the 3-year ACGB rate at 0.25% and buy bonds in unlimited volume ‘across the yield curve’. Unfortunately, the market didn’t get the last part of that message straight away and hit the panic button, with the 10-year Australian Government bond yield rising over 100bps in less than a minute,” said the Australia and New Zealand Banking Group (ANZ).

On the other hand, the Fed makes swap arrangements with nine more central banks to cut the USD shortage at the time of the market’s rush to hoard the greenback.

In the case of coronavirus updates, NYC Mayor De Blasio recently signaled the shortage of medical supplies in 2-3 weeks while seeking military help to fight the pandemic. Further, news that the Brexit negotiators of the UK and the EU are both infected with the deadly virus has also renewed the risk-off.

As a result, Wall Street’s mildly positive closing fails to carry the mark on the US 10-year treasury yields that are down one basis point to 1.158%.

Given the lack of major data/events on the economic calendar, except for the People’s Bank of China’s (PBOC) rate decision, investors will keep eyes on the disease updates. News that a cure has been tested, Remdesivir, gives the hope to overcome the pandemic.

Technical Analysis

A descending trend line connecting lows marked between March 09 and 16 offers immediate resistance around 0.5950. On the downside, 0.5600 and the recent low near 0.5510 will please sellers during further downside.