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  • Risk-off amid renewed fears of coronavirus impact on major economies.
  • RBA’s GDP forecasts downgrade offsets better China trade data.
  • US employment report will be the key to watch.

AUD/USD extends losses and attacks the 0.6700 support area in the European session, as the above-forecasts Chinese January Trade Balance report failed to rescue the AUD bulls.

China’s Jan-Feb trade numbers – Upbeat

Read: China’s Trade data (CNY): Surplus, exports surprise positively, imports disappoint in Jan-Feb

          China’s Jan-Feb Trade data (USD): Surplus beats estimates as exports unexpectedly jump

During the Asian session, the RBA Governor Philip Lowe tried to hide fears of coronavirus under the rosy picture of the economy and no need for negative interest rates. However, the Aussie central bank’s monetary policy statement (SoMP), later on, unearthed the pessimism emanating from China and lowered the GDP growth forecasts.

The market’s risk tone also failed to ignore the challenges to the global economies emanating from China’s coronavirus. The same got accreditation from global rating giants like Moody’s and Fitch. However, China Banking and Insurance Regulatory Commission Vice-Chair Zhou and President Xi Jinping defied the fears, which nobody seems to care about.

With this, the US 10-year treasury yields snap the previous two-day rise to 1.63% whereas stocks in Asia also marked mild losses.

Following the early-day action, markets are likely to witness the pre-NFP bleak unless any surprises from China cross wires. However, the risk-tone is likely to remain under pressure during the meantime.

Given the recently released early indicators of the US employment data have been positive, the headline NFP is expected to rise to 160K from 145K prior. Further, the Average Hourly Earnings could increase to 3.0% YoY from 2.9% prior whereas the Unemployment Rate isn’t expected to move from 3.5%.

Technical Analysis

The pair’s failure to provide a sustained break beyond November 2019 low of 0.6753 seems to drag it towards the yearly bottom of 0.6678.

Key levels to watch