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  • AUD/USD stays depressed after Friday’s heavy losses, the biggest daily drop in 12 weeks.
  • Risks sour amid covid, vaccine and stimulus uncertainty, US dollar jumps to one month high.
  • China’s Q4 GDP, December’s Industrial Production and Retail Sales decorate calendar.

AUD/USD extends Friday’s downbeat momentum towards the 0.7700 threshold at the start of Monday’s Asian session. The Aussie pair declined the most since late October the previous day as the US dollar benefitted from the risk-off mood.

Stimulus couldn’t stimulate markets…

Despite US President-elect Joe Biden’s upbeat coronavirus (COVID-19) aid package announcement, global markets seemed to follow the “sell the fact” quote as equities couldn’t cheer the stimulus rollout. On the contrary, doubts over the practice of such a huge relief package, as well as the effectiveness of its, weigh on the risks off-late.

Elsewhere, the faster spread of the covid strain and more stringent activity restrictions in the UK, coupled with the jump in the virus numbers from the US, Japan and Europe, also add to the risk aversion. On Sunday, the UK reported 38,598 new infections, which is the lowest since December 27. Further, the US Centers for Disease Control and Prevention (CDC) reported that the total novel coronavirus cases of 23,653,919 as of yesterday versus 23,440,774 in the previous report on January 16. Moving on, chatters over the capacity to tame the virus strain by vaccines also gained momentum. It should, however, be noted that the news of a delay in Pfizer’s vaccine distribution in Europe exerted additional downside pressure on the risks.

Against this backdrop, Wall Street benchmarks closed in red by the end of the last week while the US 10-year Treasury yields also lost over four basis points (bps) to eye the 1.0% round-figure.

Looking forward, China’s fourth-quarter (Q4) GDP figures will be the key data for AUD/USD traders together with December’s Retail Sales and Industrial Production. While the GDP figures are likely to jump from 4.9% to 6.1% YoY, the quarterly numbers could also improve to 3.2% versus 2.7% prior. Further, Retail Sales is also likely to rise from 5.0% previous readouts to 5.5% whereas Industrial Production may ease to 6.9% from 7.0% marked in November.

While the risk catalysts are likely to weigh on the AUD/USD prices, likely positive details from the largest customer of Australia, namely China, may probe the bears but can’t stop them for long. It’s worth mentioning that the US markets are off today due to Martin Luther King’s Birthday.

Technical analysis

AUD/USD sellers cheering downside break of an ascending trend line from November 02, at 0.7732 now, need validation from 21-day SMA level of 0.7682, to firm up the grips.